|
Taxation Implications: Taxation Implications of Policy Ownership
CGT Exemptions:
Methods of Policy Ownership:
Buy/Sell Cover: Implications for Buy/Sell Cover
Debt Reduction Cover: Implications for Debt Reduction Cover
Third Party Payments: Implications for Promises to Distribute Insurance Proceeds to Third Parties
Commercial Debt Forgiveness:
Super Fund Ownership:
Aggregation onto One Policy:
|
Implications for Debt Reduction Cover
Overview The tax implications of Policy Ownership generally are discussed here. Income Tax Debt Reduction Cover is generally regarded as Capital in nature. As a result, the Insurance Proceeds are not subject to Income Tax on normal principles. Capital Gains Tax However, the Insurance Proceeds might be subject to Capital Gains Tax (subject to the availability of an Exemption for the particular method of Policy Ownership).
Alternative Methods of Ownership The following pages summarise the tax implications for the three alternative methods of ownership of Debt Reduction Cover:
This analysis applies equally to other forms of Key Person Capital Cover (e.g., cover intended to compensate the Company or Business for a capital loss as a result of the loss of a Key Person).
Commercial Debt Forgiveness Provisions The potential implications of the Commercial Debt Forgiveness provisions of the Income Tax Legislation for Debt Reduction Cover are discussed in more detail here.
Insurance Trust Solution The problems of both Cross-Ownership and Self-Ownership can be avoided by the use of a Business Insurance Trust Agreement (i.e., Trust Ownership).
|
Adviser Tip Trust ownership is an indirect form of self-ownership. The Life Insured is the "beneficial owner" for legal and tax purposes under the roof of the Trust.
Ian Gray travels to most capital cities regularly throughout the year and is available for Meetings. Please click here to see his availability in Brisbane, Sydney, Melbourne, Adelaide and Perth. Please contact us to arrange an appointment or teleconference.
|
