Where a company carries on overseas life assurance business (OLAB) within a non-profit fund, the income (but not capital appreciation or depreciation) attributable to OLAB is determined by reference to a hypothecated set of assets within the company's overseas life assurance fund (OLAF). In effect, the overseas life assurance business is treated for tax purposes as being linked to the assets within the OLAF for this purpose. The detailed rules for determining the size of and composition of the OLAF are specified in ICTA 1988, Sch. 19AA.

There are two main reasons for the use of an OLAF:

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