Income tax: capital gains: can a premium constitute 'an amount of money or other consideration' paid to acquire rights, or an interest in any rights, under a policy of life assurance for the purpose of subsection 160ZZI(3) of the Income Tax Assessment Act 1936 ?

No. A premium (or an instalment of a premium) paid under a policy of life assurance does not constitute, for the purposes of subsection 160ZZI(3), an "amount of money or other consideration" paid to acquire rights, or an interest in any rights, under such a policy.

Where a person did not pay an amount of money or other consideration to a previous owner to acquire the rights, or an interest in any of the rights, under a policy of life assurance, any premium (or an instalment of any premium) paid by that person to the life company under such a policy does not then constitute, for subsection 160ZZI(3) purposes , an "amount of money or other consideration" paid for the acquisition of those rights or interests. Accordingly, the effect of subsections 160ZZI(2) and 160ZZI(3) in this situation is that Part IIIA does not apply to a subsequent disposal of those rights or interest .

On the other hand, where a person did pay an amount of money or other consideration to a previous owner to acquire those rights or interest, the effect of subsections 160ZZI(2) and 160ZZI(3) here is that Part IIIA does apply to a subsequent disposal of those rights or interest. The amount paid to the previous owner and any premium (or an instalment of any premium) paid to the life company are both included in the cost base, indexed cost base or reduced cost base of the asset being the rights or interest under the policy.