Life insurance tax rules to be reviewed

The Government is to carry out a comprehensive review of life insurance tax rules, ministers said today.

Finance Minister Michael Cullen and Revenue Minister Peter Dunne said it was long overdue.

"The current rules have been operating in a largely unmodified form since 1990, even though the commercial, regulatory and savings environment has changed markedly over the last 16 years," they said.

"Life insurance constitutes a major sector of the savings industry with over $9 billion of savings funds under management."

They said the review would also look at whether life insurance should be included in the proposed rules for taxing portfolio investments, the subject of a bill currently before Parliament, to prevent it being disadvantaged relative to other forms of savings.

"We expect the review to be welcomed by the life insurance industry, which has been especially keen to have life insurance included in the forthcoming investment tax rules," the ministers said.

"The review will be conducted in full consultation with the industry."

Any changes that emerge from it will be included in a tax bill to be introduced next year.

- NZPA