Issue
Is a life insurance company entitled to an exemption under section 320-40 of the Income Tax Assessment Act 1997 (ITAA 1997) if, after 30 June 2000, it increases the annual management fee that it imposes under its investment linked superannuation policy, to an amount that does not exceed the maximum annual management fee that it was entitled to impose, under the terms and conditions of the life insurance policy, entered into before 1 July 2000?
Decision
Yes. A life insurance company is entitled to an exemption under section 320-40 of the ITAA 1997 if, after 30 June 2000, it increases the annual management fee it imposes under its investment linked superannuation policy, to an amount that does not exceed the maximum annual management fee that it was entitled to impose, under the terms and conditions of the policy, entered into before 1 July 2000.
Facts
The terms of an investment linked superannuation policy before 1 July 2000 entitled a life insurance company to impose a maximum annual management fee of 2 per cent of assets under management.
Before 1 July 2000 the life insurance company imposed an annual management fee of 1.5 per cent under the terms of its investment linked superannuation policy. After 30 June 2000 the Life Insurance Company imposes an annual management fee of 1.6 per cent under the terms of its investment linked superannuation policy.
Reasons for Decision
The terms of an investment linked superannuation policy before 1 July 2000 entitled a life insurance company to impose a maximum annual management fee of 2 per cent of assets under management.
Before 1 July 2000 the life insurance company imposed an annual management fee of 1.5 per cent under the terms of its investment linked superannuation policy. After 30 June 2000 the life insurance company imposes an annual management fee of 1.6 per cent under the terms of its investment linked superannuation policy.
Therefore, the life insurance company meets the requirement of subsection 320-40(4) of the ITAA 1997 and is entitled to an exemption for specified management fees under section 320-40 of the ITAA 1997 for its investment linked superannuation policy.