Taxation

How insurance premiums and claim proceeds are taxed will depend on the type of insurance policy and beneficiary, but will also depend on whether you choose to hold the policy inside or outside of superannuation. You should seek specialist taxation advice to check the taxation applicable to your circumstances.
 
 
  

 

Inside Superannuation

In Personal Name

Premiums            

 

Premiums are deductible to the fund, although depending on the type of TPD definition you choose, only part of the TPD premiums may be deductible

Not deductible except for income protection policies
Claim Proceeds   
 
1. Life policy – the proceeds are taxable only if paid to a non-tax dependant
 
2. TPD – if you are under age 60 when you take this money out of superannuation tax may be payable
 
3. Income protection – the benefits are assessable income to you and are taxed at your marginal tax rate
The proceeds from a life, TPD or trauma policy are generally tax-free. However, the benefits from an income protection policy are assessable income and taxed at your marginal tax rate

Posted By David Orth