It is natural that we want to protect everything we care about. Many of us insure our cars, homes and property. Can you claim income protection on tax?
What is income protection insurance?
Income protection is one of the most basic forms of life insurance. If you are unable to work and have income protection, your insurance company usually pays you 75% of your income for a certain period of time. How long? It depends on the rules and fees you agree to.
What tax breaks can you apply for income protection insurance?
Basically you can apply for income protection insurance contributions as a tax deduction. The amount of tax deduction you can apply for may depend on:
- Your taxable income
- Your tax rate
- Your premium price
The tax deduction is different, but depending on the circumstances, this may mean a significant reduction compared to the original premium paid.
Can I apply for tax relief for income protection through pension contributions?
No, although you can arrange retirement income insurance contributions, these contributions are not eligible for tax breaks. ATO states that the exemptions apply when you take out a pension policy, insurance premiums are deducted from super premiums. This applies to super-managed super funds as well as commercial superfunds.
How do you perform an income protection check?
Find out if you have income protection so you know where you stand if anything stops you from working. PLUS check if you have insurance in the right place so that it works financially for you.
- Check the insurance section on your last pension statement. Is there any income protection or pay continuity protection?
- Check the employment contract to see if your employer offers income protection insurance as part of the payroll package.
In summary, you can apply for income protection tax deduction. Its amount depends on many factors.