The tax benefits of Income Protection Insurance
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Income Protection Insurance offers so much. In addition to dealing with all those ‘What Ifs’ and ‘unexpected events’, income protection could also help reduce the amount of tax you pay.
If you can prove that your income protection insurance premium relates to the earning of assessable income, you can claim the premium as a tax deduction.
The Australian Taxation Office (ATO) takes the view that when you pay
an income protection insurance premium, it results in the benefit of
income and allows a deduction for it.
The only thing you need to consider is if you have a combined Income
Protection and Death/Disability policy. If you have this type of
insurance cover and there is a component in the policy for lump-sum
payment for death, injury or disablement, then this part of the premium
cannot be claimed as a deduction.
You can find out the portion of the premium that you can claim from
your insurance company. Just ring and ask for a copy of the schedule
outlining the policy number and the breakdown of the premiums for each
part of your income protection insurance policy.
On the flipside of the tax deduction, if you do make a claim on your
income protection insurance and are paid an income from it, you will
need to include this income in your tax return.
Also, whenever renewal time rolls around for your income protection
insurance make sure you review the benefits payable. Events like a
promotion, changing jobs, a new baby or a new house are also good
triggers for making sure your income protection insurance will cover
all of your day-to-day expenses if you ever need to make a claim.
At Highland Financial we can arrange income protection insurance that
is suited to your needs. We will assess your individual situation and
your business risks, so we can recommend the most comprehensive income
protection insurance.
Our consultations are obligation free, so why not find out more about income protection insurance? Call or email us today:
P: 07 3010 9290
E:
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