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Inland Revenue

Tax Policy

Ability for Commissioner to impose conditions on an insurance CFC determination

(Clause 140)

Summary of proposed amendment

The Commissioner is currently able to issue a determination that an insurer is a non-attributing active CFC. The bill proposes that the authorising provision be amended to expressly give the Commissioner an ability to impose conditions for the application of the determination.

Application date

Income years beginning on or after 1 July 2009.

Key features

Proposed new section 91AAQ(5B) would allow the Commissioner to stipulate conditions that must be satisfied in addition to the existing requirements for a CFC or CFC group member to qualify as a non-attributing active CFC.


As part of the Taxation (International Tax, Life Insurance and Remedial Matters) Act 2009, an exemption was introduced for insurance CFCs as a transitional measure until further work was done to develop special rules for financial CFCs more generally.

To qualify for this exemption the insurance CFC must first have applied for and obtained a determination from the Commissioner of Inland Revenue and this determination must not have expired or been revoked. Section 91AAQ of the Tax Administration Act 1994 regulates this process. The bill amends section 91AAQ to enable the Commissioner of Inland Revenue to be able to impose conditions on an insurance CFC determination. For example, a determination could be made conditional on the insurer informing the Commissioner of any significant changes to its organisational structure, funding or major business activities.

Note that the Commissioner already has the ability to revoke a previously issued determination.