Income Tax (Concessionary Rate of Tax for Income of Life Insurance Companies Apportioned to Policyholders) Regulations

Income Tax Act

(Chapter 134, Sections 43(3))

Rg 29

G.N. No. S 193/1997

REVISED EDITION 1998

(15th June 1998)

[11th April 1997]

Citation

1. These Regulations may be cited as the Income Tax (Concessionary Rate of Tax for Income of Life Insurance Companies Apportioned to Policyholders) Regulations and shall have effect for the year of assessment 1993 and subsequent years of assessment.

Definitions

2. In these Regulations --

“allocate” means allocate under section 16 of the Insurance Act (Cap. 142);

“life insurance company” means any company registered to carry on life insurance business under the Insurance Act;

“life insurance fund” means any life insurance fund established by a life insurance company relating to Singapore life policies but does not include --

(a)	any life insurance fund established by the company wholly for non-participating policies; or
(b)	any part of any life insurance fund established by the company which has been separately identified by the company as being established wholly for non-participating policies;

“"life insurance surplus" and "Singapore life policies"” have the same meanings as in section 26(5) of the Act;

“non-participating policies” has the same meaning as in paragraph 7 of the First Schedule to the Insurance Act (Cap. 142).

Application

3. These Regulations shall apply to any life insurance company.

Concessionary rate of tax

4. --(1) Tax shall be payable at the rate of 10% on that part of the life insurance surplus of any life insurance fund of a life insurance company which is apportioned to the policyholders of the company in accordance with this regulation.

(2) Where in the basis period for any year of assessment --

(a)	a life insurance company allocates any amount of surplus of any life insurance fund as determined under the Insurance Act to its policyholders and shareholders;
(b)	the life insurance surplus of the life insurance fund is positive; and
(c)	the total amount of surplus of that life insurance fund allocated to policyholders and shareholders in that basis period is not less than the life insurance surplus of that fund for that basis period,

the part of the life insurance surplus of that fund to be apportioned for that year of assessment to the policyholders of the company for the purposes of this regulation shall be ascertained by the formula (A/B) x C,

where A is the amount of surplus of the life insurance fund allocated to policyholders;

B is the total amount of surplus of the life insurance fund allocated to policyholders and shareholders; and

C is the life insurance surplus of the life insurance fund.

(3) Where in the basis period for any year of assessment --

(a)	a life insurance company allocates any amount of surplus of any life insurance fund as determined under the Insurance Act (Cap. 142) to its policyholders and shareholders;
(b)	the life insurance surplus of the life insurance fund is positive; and
(c)	the total amount of surplus of that life insurance fund allocated to policyholders and shareholders in that basis period is less than the life insurance surplus of that fund for that basis period,

A + (C-B) x D,

where A, B and C have the same meanings as in paragraph (2); and

D is the minimum percentage of the surplus of the life insurance fund to be allocated to policyholders as provided in the articles of association of the company or, where no such percentage is provided in those articles, the following percentages:

(i)	80% for the year of assessment 1993;
(ii)	82% for the year of assessment 1994;
(iii)	84% for the year of assessment 1995;
(iv)	86% for the year of assessment 1996;
(v)	88% for the year of assessment 1997; and
(vi)	90% for the year of assessment 1998 and every subsequent year of assessment.

(4) Where in the basis period for any year of assessment --

(a)	a life insurance company allocates any amount of surplus of any life insurance fund as determined under the Insurance Act (Cap. 142) to its policyholders and shareholders; and
(b)	the life insurance surplus of the life insurance fund is nil or negative,

where C and D have the same meanings as in paragraph (3).

(5) Where in the basis period for any year of assessment a life insurance company does not allocate any amount of surplus of any life insurance fund as determined under the Insurance Act to its policyholders and shareholders, the part of the life insurance surplus of that fund to be apportioned for that year of assessment to the policyholders of the company for the purposes of this regulation shall be ascertained by the formula C x D,

where C and D have the same meanings as in paragraph (3).

Account for amount apportioned to policyholders

5. --(1) Every life insurance company shall credit any amount of the life insurance surplus of any life insurance fund apportioned to its policyholders in accordance with regulation 4 to an account to be kept by the company.

(2) As soon as a life insurance company allocates any amount of surplus of any life insurance fund to its policyholders, that amount shall be debited to the account kept under paragraph (1).

Account for amount not apportioned to policyholders

6. --(1) Every life insurance company shall credit any amount of the life insurance surplus of any life insurance fund which is not apportioned to its policyholders in accordance with regulation 4 to an account to be kept by the company which is separate from the account kept under regulation 5(1).

(2) As soon as a life insurance company allocates any amount of surplus of any life insurance fund to its shareholders, that amount shall be debited to the account kept under paragraph (1).

Submission of accounts to Comptroller

7. Every life insurance company shall in each year deliver to the Comptroller a copy of the accounts kept under regulations 5 (1) and 6(1) made up to the last day of the basis period for each year of assessment.

[G.N. No. S 193/97]

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