Section EY 15 — Income Tax Act 2007: Policyholder base income: non-participation policies

EY 15 Policyholder base income: non-participation policies What is included (1) For an income year, a life insurer's income is included as their policyholder base income if it relates to life insurance policies that are not profit participation policies, and it–– (a) does not relate to life risk components of premiums and claims: (b) is investment income that–– (i) is included in investment income gains or losses in the financial statements of the life insurer; and (ii) is not a premium; and (iii) is fairly attributable to savings product policies. Certain income: basis of apportionment (2) Despite subsection (1), if an amount of investment income is included in a life insurer's policyholder base income under subsection (1), but may also be shareholder base income under section EY 19 , ignoring section EY 19(1)(d), then the investment income is included in policyholder base income to the extent provided by the formula— income × average surrender value average savings assets. Definition of items in formula (3) In the formula,— (a) income is the income described in subsection (2): (b) average surrender value is, for the savings product policies to which the income relates, the average surrender value of the policies for the income year. The life insurer may determine an equitable and reasonable basis for the measurement of the average: (c) average savings assets is, for the savings product policies to which the income relates, the average market value of assets held by the life insurer for the policies for the income year. The life insurer may determine an equitable and reasonable basis for the measurement of the average. More equitable or reasonable basis of apportionment (4) Despite subsections (2) and (3), for investment income described in subsection (2), the life insurer may use a basis of apportionment that is different from the one described in subsections (2) and (3), if that basis results in an amount, actuarially determined, that is more equitable and reasonable than an amount determined using the basis described in subsections (2) and (3). Treatment of de minimis life risk component amounts (5) An amount of income relating to a policy that, but for this subsection, is an amount related to the life risk of a premium or life reinsurance claim, is treated as not relating to the relevant life risk component for the purposes of subsection (1), if–– (a) the life insurer has actuarially determined that the life risk is 1% or less of the premium or life reinsurance claim; and (b) chooses to apply this subsection for the policy. Defined in this Act: actuarially determined , amount , claim , income , income year , life insurance policy , life insurer , life reinsurance , life risk , life risk component , market value , premium , policyholder base income , profit participation policy , savings product policy , shareholder base income , surrender value Section EY 15: substituted, on 1 July 2010, by section 190(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section EY 15(5): amended, on 1 July 2010 (applying for income years beginning on or after 1 July 2010), by section 32(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).