Amendments to the income tax law affecting life insurance companies have been announced by Assistant Treasurer Helen Coonan. Officially titled the Review of Business Tax life insurance reforms, the proposed amendments are intended to overcome technical difficulties the industry has in the practical application of the new legislation.

The amendments will ensure that a life insurance company’s “ordinary class” losses can be applied only against the ordinary class of taxable income. And “virtual pooled superannuation trust” losses will be applied only against the complying super class of taxable income.

Senator Coonan said the changes will also overcome life industry concerns about how income tax law affects life companies which reinsure with non-resident companies. The amendments will take effect from July 1 next year, Final legislation to implement the changes will be developed in consultation with the industry.