Category: Insurance

Many believe that income protection premiums are fully tax deductible.  However, this is not always the case.  As income protection policies are designed to replace income at the time of a claim, the Australian Tax Office (ATO) allows a tax deduction on the premiums paid.  These deductions are dependent on claims being treated as income and not capital.  As a result, if there is a component of the IP premium that goes towards a death or physical injury benefit, then that part of the premium is not an allowable deduction.  IP premiums inside superannuation are only tax deductible to the extent that the policy terms satisfies the SIS Act’s ‘temporary incapacity’ definition. 

Singles earning more than $130,001 and families earning more than $260,001 will lose access to their private health insurance rebate from the 2012-13 financial year onwards, under a means test that recently received Royal Assent and will become effective on July 1, 2012.

Personal insurance advice should be integrated with estate planning and be tax focused.