Income protection insurance - get your tax break now!

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 (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.

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 portion of a combined policy.

If you are not sure how your premium is made up, contact your insurance company or insurance broker and ask for a schedule detailing the policy number and the amount of premium payable on each respective portion of the insurance policy. If you have been considering taking out an income protection 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, until your 08/09 tax return, to gain your tax break.

For specific taxation advise please consult a tax accountant.

For more information about income protection insurance, contact an xLife consultant today or request a income protection quote!.

Disclaimer
The information provided is general in nature and does not take into account your particular insurance needs, financial situation or investment objectives. We recommend that you speak to an xLife risk adviser or life insurance broker before you make any decision regarding risk insurance.