Section EY 11 — Income Tax Act 2007: Superannuation schemes providing life insurance

EY 11 Superannuation schemes providing life insurance Benefits treated as life insurance (1) The provision by a trustee of a superannuation scheme of a benefit to a member or beneficiary of the scheme is treated as the provision of life insurance if the trustee provides life insurance to any member or beneficiary, unless subsection (2) applies. Exemption for certain schemes (2) A trustee of a superannuation fund is treated as not carrying on the business of life insurance for an income year if the fund meets all the requirements of subsections (3) to (9) for the income year. Fund must be registered (3) At all times in the income year, the fund must be registered under the Superannuation Schemes Act 1989 . Trustee cannot be a life insurance company (4) At all times in the income year, no trustee of the fund is a company carrying on the business of providing life insurance to which the Life Insurance Act 1908 applies. Nature of funds (5) At all times in the income year, the fund must be 1 of the following kinds: (a) a fund established by an employer, or a group of employers who are associated, to provide benefits only to persons who are employees of, or related by employment to, such an employer, or to another associated employer who agrees after the fund's establishment to make contributions to it: (b) a fund constituted under the Government Superannuation Fund Act 1956 that provides benefits only to persons who are employees of, or related by employment to, an employer who agrees or is required to contribute, or on whose behalf contributions are made, to the fund: (c) a fund constituted under the National Provident Fund Act 1950, the National Provident Fund Restructuring Act 1990 , or the National Provident Fund Restructuring Amendment Act 1997 that has as its trustee the Board of Trustees of the National Provident Fund. Only certain fund beneficiaries allowed (6) At all times in the income year, each beneficiary of the fund must be— (a) a natural person that is an employee of or related by employment to an employer of the kind referred to in subsection (5)(a) or (b): (b) a natural person that is a beneficiary of the fund, in the case of a fund referred to in subsection (5)(c) (which refers to funds related to the National Provident Fund): (c) an employer of members of the fund, to the extent of the employer’s contingent interest in a fund surplus. Significant employer superannuation contributions required (7) At all times in the income year, each employer is required by the trust deed or Act constituting the fund to make or is making, or having made on their behalf, superannuation contributions to provide to a significant extent the fund benefits, except to the extent to which subsection (10) applies. No avoidance effect (8) The fund must not have been established, and must not be being used at any time in the income year, in a way that has the effect of defeating the intent and application of the life insurance rules. FMA approval required (9) The trustee of the fund must have made a written application to the FMA for, and the FMA must have granted, approval that the fund is for the income year one that complies with subsections (3) to (8). Exemptions to requirements of subsection (7) (10) Subsection (7) does not apply if— (a) the FMA is satisfied that, for the income year, subsection (7) would have been complied with but for the fund assets exceeding the accrued benefits from the fund: (b) the fund is one referred to in subsection (5)(c) (which refers to funds related to the National Provident Fund). Limited superannuation contributions disregarded for subsection (7) (11) For the purposes of subsection (7), superannuation contributions that are merely nominal or that only meet the costs of administration and investment management are disregarded. Notice by FMA (12) The FMA must notify the trustee of a superannuation fund as soon as practicable after determining that— (a) the fund complies with subsections (3) to (8) for an income year: (b) the fund ceases to comply with the subsections for an income year. Objection under Superannuation Schemes Act (13) A person dissatisfied with the FMA's decision may appeal against the decision under section 23 of the Superannuation Schemes Act 1989 and has no right of objection under the Tax Administration Act 1994 . Meaning of related by employment (14) In this section, a person is related by employment to an employer if the person is— (a) a former employee, in the case of deferred benefits relating to prior employment: (b) a relative or dependent of an employee, in the case of benefits arising from the employee’s or former employee’s membership in the fund. Defined in this Act: associated , company , employee , employer , income year , life insurance , life insurance rules , related by employment , relative , superannuation contribution , superannuation fund , superannuation scheme , trustee Compare: 2004 No 35 s GD 8(1), (3)–(8) Section EY 11(3): amended, on 1 May 2011, by section 82 of the Financial Markets Authority Act 2011 (2011 No 5). Section EY 11(5) heading: substituted (with effect on 1 April 2010), on 21 December 2010 (applying for the 2010–11 and later income years), by section 57(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130). Section EY 11(5): substituted (with effect on 1 April 2010), on 21 December 2010 (applying for the 2010–11 and later income years), by section 57(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130). Section EY 11(7) heading: amended (with effect on 1 April 2008), on 6 October 2009, by section 188(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EY 11(7): amended (with effect on 1 April 2008), on 6 October 2009, by section 188(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EY 11(9) heading: amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5). Section EY 11(9): amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5). Section EY 11(10)(a): amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5). Section EY 11(11) heading: amended (with effect on 1 April 2008), on 6 October 2009, by section 188(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EY 11(11): amended (with effect on 1 April 2008), on 6 October 2009, by section 188(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EY 11(12) heading: amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5). Section EY 11(12): amended, on 1 May 2011, by section 85(1) of the Financial Markets Authority Act 2011 (2011 No 5). Section EY 11(13): amended, on 1 May 2011, by section 82 of the Financial Markets Authority Act 2011 (2011 No 5). Section EY 11 list of defined terms superannuation contribution : inserted (with effect on 1 April 2008), on 6 October 2009, by section 188(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).