On Income Protection Insurance
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Income Protection Insurance & Tax
One of the key benefits of income protection insurance is that the premiums you pay are generally tax deductable.
The ATO’s Views
In most cases where an individual receives payments in lieu of regular income as part of an income protection insurance policy, the ATO will consider the premiums paid on this policy tax deductible.
Be Careful
If you have a combined insurance policy, it’s imperative that you only claim a deduction on premiums directly relating to your income protection cover.
Monthly benefits claimed from your income protection provider are generally assessable and need to be declared in your tax return for the relevant tax year.
Understanding Your Premiums
If you’re unsure about the make up of your premium, it’s advised you get in touch with your life insurance company or advisor who can provide you with a schedule that details the amount of premium payable on each respective portion of the insurance policy, helping you clearly identify which premiums can be claimed as tax deductions.
Timing
If you want to take advantage of this tax incentive, make sure to take out an income protection insurance policy before 30th of June of the current financial year. Payment of your premium before this date will generally make it tax deductible in this year’s tax return.
Further Information
If you require more information about income protection insurance and its tax implications, contact your tax accountant or visit the ATO website to find out how you can take advantage of tax deductible premiums.
