19 Jul 2012
SOVEREIGN ASSURANCE COMPANY LIMITED v COMMISSIONER OF INLAND REVENUE HC AK CIV-2005-404-6802
- Citation
- openlaw-f20cb3df_8b9c_42fd_88b6_b93efa3cbc2e.pdf
- Court
- High Court
The High Court held the refundable commission arrangements are separable from the mortality reinsurance and constitute a financial arrangement under s EH14 of the Income Tax Act 1994; they do not amount to a contract of insurance for the purposes of the excepted financial arrangement exclusion, so the qualified accruals rules apply to the additional (interest-like) component; once the accruals rules apply the base component is irrelevant for income tax purposes and, alternatively if accruals did not apply the base component would be capital in character and not taxable.