Section EY 27 — Income Tax Act 2007: Capital guarantee reserving amount: non-participation policies not annuities

EY 27 Capital guarantee reserving amount: non-participation policies not annuities Calculation of reserving amount (1) For an income year (the current year ), a life insurer has a reserving amount for a class of policies calculated using the formula— opening capital guarantee reserve − closing capital guarantee reserve. Definition of items in formula (2) In the formula,— (a) opening capital guarantee reserve is— (i) the amount of the life insurer’s closing capital guarantee reserve for the class of policies, for the income year before the current year; or (ii) the amount that would be the capital guarantee reserve for the class of policies, using subsection (3) with necessary modifications, calculated at the end of the income year before the current year, if the life insurer has no closing capital guarantee reserve for the income year before the current year: (b) closing capital guarantee reserve is the amount of the life insurer’s capital guarantee reserve under subsection (3) for the class of policies, calculated at the end of the current year. Capital guarantee reserve (3) A life insurer’s capital guarantee reserve is the net amount of credits and debits on account of a risk-linked provision for future obligations in relation to a guarantee, for the class of policies, by the life insurer that capital invested will be returned or that a minimum return on capital will be paid. Reflex in policyholder base (4) For the current year, if the reserving amount under this section is positive, the life insurer has that amount as a deduction included in their policyholder base allowable deductions. For the current year, if the reserving amount under this section is negative, the life insurer has that amount as income included in their policyholder base income. Reflex in policyholder base: exception (5) Despite subsection (4), for the current year, the life insurer does not have that amount as income included in their policyholder base income to the extent to which the amount represents payment on account of lost capital in the policyholder base. Defined in this Act: amount , class of policies , income year , life insurer , pay , policyholder base , policyholder base allowable deduction , policyholder base income Section EY 27: 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 27(2)(a)(ii): amended (with effect on 1 July 2010), on 7 September 2010, by section 49(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).