Income Protection & Tax
Unlike most personal insurance premiums, income protection insurance premiums are generally tax deductible. The Australian Tax Office takes the view that any payment under an income protection insurance (or sickness and accident) policy in lieu of your regular income is assessable for tax purposes. As such, the income protection policy premium (being the cost of obtaining that benefit), qualifies as a tax deduction.
When are income protection premiums not tax deductible?
Generally tax deductions are not available for individuals where premiums are paid for insurance policies which provide a lump sum benefit for, say, death or traumatic events. Therefore, care needs to be taken to ensure that any tax deduction claimed is only for the amount of premium directly related to the income protection cover portion of a combined policy.
If you are not sure how your premium is made up, contact your life insurance company or insurance agent and ask for a schedule detailing the policy number and the amount of premium payable on each respective portion of the insurance policy.
For specific taxation advise please consult a tax accountant.
If you have been considering taking out an income insurance policy, then now is the time to act. Payment of your premium before 30th June will generally entitle you to a tax deduction in this year’s tax return. If you wait until July, you will have to wait another year to gain your tax break.
How to claim a tax deduction for your income protection premiums in your 2013 return. How much you can expect to receive is based on your marginal tax rate
Income protection insurance can be tax deductible, allowing you to save on your premiums. We show you how you can maximise your tax benefits leading into the end of financial year
Income protection insurance tax deductions, generally if you pay your premiums before the 30th June it will result in a higher tax deduction this financial year
Income protection premiums are generally tax deductible in Australia, allowing you to save! Maximise your income protection and find out how can claim