Do you pay tax if you are on claim with your income protection insurance?

Can you claim the premiums you pay for the insurance as a tax deduction?

Income protection will pay you an income should you not be able to work due to sickness or accident.

There are many different variables to income protection, each of these variables have an effect on what you are covered for. Some of these variables include

• Waiting period
• Benefit period

• Amount you can be covered for
• Payment structures
• Tax on income protection
• Occupation
• Evolution of income protection

In this series, I’m going to break down into bite sized chunks these different variables.

Tax

Should you find yourself in the unfortunate position of receiving a payment from your income protection policy, do you have to pay tax on this income?

The short answer is, yes you do. This income is seen as income by the ATO and as such will be a part of your income when you put in your tax assessment forms.

On the other hand, the premiums you pay for income protection insurance is seen as an expense in generating income, so you claim it against your income you generate. In other words, you get some of the premium back at tax time.

If you have your income protection insurance through the superannuation fund, the superannuation fund will claim the tax deduction and no yourself.

If you are interested in finding out more about income protection or if you have any questions, send me a message and we can have a obligation free consultation.