Income Protection Insurance Superannuation Tax Deductible

A superannuation fund can claim a tax deduction for life insurance policies 295 465 1997 tax act.

Income protection insurance superannuation tax deductible. A superannuation fund is generally subject to a 15 tax rate on its income. Income protection insurance is your safety net with a tax deductible perk. With an increasing number of superannuation funds adding income protection alongside their other default life. You pay 12 months of premium in advance to receive a tax deduction.

Therefore the tax deduction for the insurance premiums reduces the tax payable on this income by 15. This is because the premiums cover some risks where the related costs are not allowable for tax purposes. Premiums for life tpd and income protection inside superannuation are generally tax deductible to the superannuation fund that owns the insurance policy. Section 471 taxes consolidation act 1997.

Tax treatment of benefits received under permanent health benefit schemes section 125 taxes consolidation act 1997 this manual is currently unavailable as it is being updated. So while a person is not able to claim a tax deduction on life insurance proceeds they might be able to enjoy the same effect by making tax concessional contributions to their superannuation fund. Therefore if you paid your premiums with your own money and you are the listed as the policy owner on the policy you will generally be able to claim the tax deduction in the year you paid the. The australia tax office ato is of the view that because income protection insurance premiums are there to protect your income which is tax assessable your premiums are tax deductible in nature.

The decision in mcknight v sheppard 1999 71 tc 419 see bim37965 does not affect this. Yes income protection insurance premiums are a tax deductible expense to the trustee of the superannuation fund who should then apply the tax deduction credit towards your member balance. Can provide protection even if the life insured is not employed at the time of incapacity. Ability to choose between indemnity value or agreed.

And you can get a tax deduction for income protection plans as long as they are not arranged as part of your superannuation. Keep in mind that income protection insurance premiums are generally tax deductible in your individual name also. If you prepay your income protection before 30 june you can claim your tax deduction in the current financial year e g. Income protection insurance is tax deductible but super may have it covered.