Notice of Rulings, Notice of Addenda

Overview

The Commissioner of Taxation, Chris Jordan, has introduced a ruling under the Income Tax Assessment Act 1997 to address issues related to the tax treatment of CommInsure Protection – Split Total and Permanent Disability (TPD) Cover. This ruling, PR 2017/11, aims to clarify the Commissioner's position on the specified arrangement from 1 July 2017 to 30 June 2020, ensuring that entities entering into this scheme during this period are aware of the tax implications. This legislative action is taken by the Australian Parliament to provide certainty and compliance in the tax treatment of such insurance arrangements. The policy objective is to ensure that taxpayers understand their obligations under the tax law with respect to these particular insurance products, thereby promoting transparency and fairness in the tax system.

Scope and Application

Pursuant to the Commissioner of Taxation's notice of Ruling PR 2017/11, the specified class of entities that enter into the CommInsure Protection – Split Total and Permanent Disability (TPD) Cover scheme from 1 July 2017 until 30 June 2020 are subject to the Ruling, which sets out the Commissioner's position on the matter. This Ruling applies from 1 July 2017 and is limited to the specified class of entities during its period of application. Additionally, Addendum PR 2014/13 amends Product Ruling PR 2014/13 to incorporate a new Product Disclosure Statement and Policy and to reflect a change in the policy owner of the Total Care Plan Super policy. This Addendum applies on and from 1 July 2014. The Rulings can be accessed via the Australian Taxation Office's website at http://ato.gov.au/law. These Rulings serve to clarify the tax treatment and obligations for entities involved in the specified CommInsure Protection – Split TPD Cover scheme and its amendments.

Key Provisions

The main sections of this Ruling, PR 2017/11, provide the Commissioner of Taxation's position on CommInsure Protection – Split Total and Permanent Disability (TPD) Cover, specifying the tax treatment of this insurance scheme. The Ruling applies from 1 July 2017 and is limited to the specified class of entities entering into the scheme during the period from 1 July 2017 to 30 June 2020 (section 1). The Ruling clarifies the tax implications, including the treatment of premiums and benefits under income tax law, aiming to provide certainty to the parties involved. The obligations imposed by this Ruling include adherence to the specified conditions and criteria for the tax treatment of the premiums and benefits related to the CommInsure Protection – Split TPD Cover. Entities must ensure that their arrangements and transactions comply with the provisions set out in the Ruling to avoid potential tax liabilities. The Ruling requires entities to maintain appropriate records and documentation to substantiate their claims and ensure compliance with the tax obligations outlined (section 2). Breach of the provisions outlined in this Ruling may lead to various consequences, including reassessment of taxable income and the imposition of penalties. The Commissioner has the authority to reassess the income tax position of entities that do not comply with the Ruling, potentially resulting in additional tax liabilities, interest, and penalties. The maximum penalties for non-compliance can include fines and legal action, depending on the nature and extent of the breach (section 3). The Addendum, PR 2014/13, further modifies the original Ruling by incorporating changes to the Product Disclosure Statement and Policy, and adjusting the policy owner details, ensuring that the Ruling remains current and applicable to the evolving structure of the insurance scheme.