Insurance in tax season
With the end of financial year a few months away, have you considered if you may be able to claim any personal insurance premiums at tax time? For many people it can be very cost effective to structure your personal insurances through super. The group buying power which normally comes with insurance through super, often gives you more cover for a very reasonable premium.
In some situations it is important to consider options outside of super particularly when you have a significant need to structure and tailor your policy in line with your financial plan.
From a tax perspective, life insurance, TPD, trauma and income protection will generally be deductible to a super fund, the tax saving being 15 cents in the dollar on the premium paid.
The same insurances aren’t necessarily useful from a tax perspective if held outside of super. Income protection insurance is tax deductible if held in your own name and many clients do elect to hold this type of insurance personally. However life insurance, TPD and trauma are not deductible in your own name hence they’re commonly held in super.
- For existing income protection cover outside of superannuation, consider prepaying your premiums before 30 June to secure a tax deduction this year
- If you have no cover – get advice on the type of insurance that is appropriate for you and where it can be held within your group and the tax implications involved.