09 Jun 09 Payment of inflated insurance premiums to a related party - TA 2009/15On 4 June 2009, the ATO issued Taxpayer Alert TA 2009/15 entitled "Payment of inflated insurance premiums to a related party". The Taxpayer Alert describes an arrangement involving payments of amounts described as insurance premiums which are excessive by reference to the coverage provided and feature no significant transfer of insurance risk.
In a media release issued on the same day, the Commissioner, Michael D’Ascenzo, said the ATO has doubts about the legitimacy of these arrangements as they aim to inappropriately reduce taxable income by claiming excessive tax deductions. “We know these arrangements are in the market and we are warning businesses to be cautious about entering into them as they may be ineffective under the law,” Mr D’Ascenzo said.
For a copy of TA 2009/15, go here
For a copy of the ATO media release, No 2009/38, 4 June 2009, go here