It is fairly complicated, as there are various "moving parts", but it is not insurmountable.

In this course I shall attempt to demystify long-term insurance tax.

In order to do that, you need:

• to have an understanding of the different parts, i.e., information, principles and concepts,
• a plan of action, and
• a process to execute.

And like anything in life that is worthwhile, it will take some time to learn and comprehend, and get a sense of how everything fits together.

You shouldn’t be in a hurry, and don’t let it bother you if you do not grasp everything right from the start.

The area of taxation of long-term insurance companies is vast, and consists of a lot of simple things, and a couple of more complicated things.

Most people already understand the simple things when they look at them separately or individually, but when everything is put together, it sometimes appears overly complex.

By way of example:

You know:

1. what Gross Income is.
2. what section 11(a) - the general deduction formula - stipulates.
3. reserves and provisions cannot be deducted for tax purposes, unless specifically provided for.
4. that certain expenses must be apportioned.
5. a company/person is taxed on a certain portion of capital gains.
6. that assessed losses can be carried forward to subsequent years.
7. that only expenses incurred in a specific year can be claimed in that year.
8. that certain donations can be claimed.
9. Etc.

All the above apply to the taxation of long-term insurance companies.

However, there are some different rules to determine the timing of income and expenses, taxation, providing for reserves, and other issues. Due to the nature of long-term insurance, the timing of income and expenses is not always clear-cut. In other words, "expenses" could be incurred and paid long after "income" was received.

Section 29A considers all these things, and more, and then attempts to tax a policyholder and company on income earned in the appropriate period.

We explore the above in this course.

Obviously, there are various very specialised areas in life insurance, and the valuations, processes and calculations to determine liabilities, timing etc. are multi-layered. The purpose of this course is not to address all those issues.

You should however have a much better understanding of how things fit together once you have gone through this course.