Section EZ 60 — Income Tax Act 2007: Actuarial reserves: calculation

EZ 60 Actuarial reserves: calculation Calculation by actuary (1) The life insurer’s actuarial reserves must be actuarially determined. All reserves or 1 or more amounts (2) The actuary may calculate— (a) the actuarial reserves for all the life insurance policies for which the life insurer is the insurer; or (b) the amount in the life insurer’s actuarial reserves for 1 or more life insurance policies for which the life insurer is the insurer. Interest, mortality, and other assumptions and bases of calculation (3) The actuary must do the calculation using interest, mortality, and other assumptions and bases of calculation that— (a) are based on the same principles as those used in the actuarial advice on which the following are calculated: (i) the level of surplus funds available to the life insurer for allotment or payment to shareholders or policyholders; or (ii) the level of surplus funds available to the life insurer, if a superannuation scheme, for allotment to objects of the scheme other than the object of providing for members’ benefits; and (b) are likely to produce a reasonable estimation of the future experience of the life insurer in relation to life insurance policies of which the life insurer is the insurer, having regard to the past experience of the life insurer in relation to life insurance policies of which the life insurer was the insurer; and (c) conform with commercially acceptable practice. Reserves for policy never negative (4) The amount in the actuarial reserves for a life insurance policy must never be negative. Reserves for all policies never less than total of surrender values (5) The actuarial reserves at any time must not be less than the total of the surrender values of all the life insurance policies they cover at that time. Reserves for policies same at end of one, and start of next, income year (6) The amount in the actuarial reserves for life insurance policies at the start of an income year is the same as the amount in the actuarial reserves for the life insurance policies at the end of the previous income year. Effect of partial reinsurance (7) The actuarial reserves of a life insurer who has partial life reinsurance must be reduced by an amount that the actuary responsible for actuarial control of the life insurer considers appropriate having regard to the nature of the life reinsurance policies. Defined in this Act: actuarial reserves , actuary , amount , income year , life insurance policy , life insurer , life reinsurance policy , partial reinsurance , payment shareholder , superannuation scheme Section EZ 60: inserted, on 1 July 2010, by section 199(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).