Tax office warns against life insurance bonds issued from tax havens
The Australian Taxation Office has issued an alert about life insurance bonds issued from tax havens to Australian residents that are aimed at circumventing tax payable under foreign investment fund measures.
“We know these arrangements are in the market, and we have seen a number being promoted from Vanuatu,” said Tax Commissioner Michael D’Ascenzo. He added that promoters of these life insurance bonds might attempt to exploit the lack of transparency in tax havens.
The alert stated that promoters market certain life insurance policies as qualifying for concessional tax treatment on proceeds from the policy or tax deductions on fees paid under the policy.
However, investors in these types of bonds may not be eligible for these benefits and self-managed super funds may also breach superannuation regulations.
D’Ascenzo said people who are unsure about their policies should seek independent advice, and that those who contact the Tax Office before they are contacted for an audit will be entitled to a reduction in any penalties that may apply.
AUTHOR
Caroline Munro
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