Insurance and it’s tax deductibility can be tricky. Let me help.
Any insurance that’s paid from the balance of your superannuation account is not going to be a tax deduction to you, though the premiums generally receive preferential tax treatment.
Trauma insurance is almost never a tax deduction. The only exception here is in some business insurance arrangements, where you’re insuring a key person of a business.
Income Protection insurance is pretty much always a tax deduction, for everyone – unless of course, you’re paying your premiums from super. Which is a great reason to consider holding your cover outside if super.
Personal insurance is GST free, however general insurance usually attracts GST. So Income Protection insurance arranged through an adviser is usually considered personal insurance and would be GST free. These type of policies are more comprehensive and have less restrictions than a ‘general’ Income Protection policy. They’re also usually guaranteed renewable – so an insurer can’t decide not to renew your contract if, for instance, you’ve made a number of claims on your policy. If you’re not sure where your cover falls, give your adviser a call and they’ll be able to help you.
Lastly – if you’re self-employed, you can structure your Life and TPD premiums so that they’re a tax deduction to you – but remember if you do this, you’ll likely incur some tax liabilities at claim time. And just so you know – current legislation says that only self-employed people can structure life and TPD cover like this – but recent changes to government legislation mean it’s likely that soon everyone will be able to structure their cover this way. Insurance and tax. Talk to us about what’s best for you.