CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. ATO Warns Against Offshore Life Insurance Policies

ATO Warns Against Offshore Life Insurance Policies

by Mary Swire, Tax-News.com, Hong Kong

26 November 2009


The Australian Taxation Office (ATO) has issued an alert that warns taxpayers to be cautious about investing in life insurance policies issued from insurance companies based in offshore jurisdictions, such as Vanuatu.

In the alert, Tax Commissioner, Michael D’Ascenzo said that he is concerned these arrangements may attempt to exploit the lack of transparency in such jurisdictions, and are designed to circumvent the Australian tax payable under the foreign investment fund measures.

According to D’Ascenzo, Australian resident participants involved in these arrangements may be individuals, companies, trusts, or self-managed superannuation funds (SMSFs). “We know these arrangements are in the market, and we have seen a number being promoted from Vanuatu,” he disclosed.

Under these arrangements, it is believed, certain life insurance policies are marketed as qualifying for concessional tax treatment on proceeds from the policy or tax deductions on fees paid under the policy.

However, these policies may not qualify for such benefits, which include capital gains tax exemption and the special rules applicable to reversionary bonuses paid from life insurance bonds, while the self-managed superannuation funds may also breach the regulations for complying funds.

“People considering these arrangements should be aware their tax affairs will be closely examined by ATO, in addition to potential action by other government agencies as part of Project Wickenby,” D’Ascenzo added.

People who are unsure about their situation are advised by the ATO to seek independent advice or obtain a private ruling on their individual circumstances from the Tax Office. Those who have participated in these arrangements and contact the ATO before they are contacted for an audit will be entitled to a reduction in any penalties that may apply.

A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »