November 8, 2016 taxitime

Income Protection Insurance Tax Deductions

Recently a client came in to complete their tax returns and during the process we found that the income protection insurance they wanted to claim was actually paid for by their Super Fund. This sparked an interesting discussion about how income protection deductions work and how claims would be processed.

If you hold an income protection policy in your personal name then you are eligible for a tax deduction for your premiums. Should you ever need to make a claim you will be paid the money directly.

Compare this to a policy held via your super fund. In this case the policy is in the name of the Super Fund and the Super Fund pays the premiums and claims the tax deduction. Should you need to make a claim on this policy it is done via your Super Fund. This applies whether you have a Self-Managed Super Fund, an Industry Fund or another type of Superannuation.

If you are unsure, the income protection policy paperwork will show the name of the policy holder to ensure you don’t claim a tax deduction you are not eligible for.

Rebecca Mackie, Partner, Paris Financial

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Image courtesy of yodiyim at FreeDigitalPhotos.net

 

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