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Bonus income from life insurance companies or friendly societies (funeral policies)

This is a return field only and will not be printed on the facsimile tax return.

Deceased estates only

Bonus income from life insurance companies or friendly societies is:

Payments from friendly society funeral policies

A funeral policy is a type of life insurance policy issued by a friendly society for the sole purpose of providing benefits to pay for the funeral of an insured person. In some instances, the policyholder pays a funeral director up-front for a set funeral service and this payment is managed by a friendly society in a funeral policy.

Benefits received by the deceased estate under a friendly society funeral policy that was taken out before 1 January 2003, are non-assessable and non-exempt income

If the deceased person was insured under a friendly society funeral policy taken out after 31 December 2002, the investment income from the funeral policy is included in the assessable income of the estate, if the estate's trustee:

  • instructs the friendly society to pay a funeral director or other party for the insured person's funeral expenses, or

  • is reimbursed for the funeral expenses.

In these circumstances, the distribution statement issued by the friendly society will advise the amount of income to be included on the trust tax return.

If the policy proceeds are paid to a funeral director, either under a policy assignment or as the nominated beneficiary, they are included in the funeral director's assessable income and no amount needs to be included in the estate's assessable income.

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