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Are insurance benefits taxed?

Discussion in 'Superannuation, SMSF & Personal Insurance' started by anneee11, 27th Apr, 2009.

  1. anneee11

    anneee11 Member

    Joined:
    16th Feb, 2009
    Posts:
    5
    Location:
    Melbourne, VIC
    Hi,

    Can anyone clarify if insurance benefits (eg. TPD payout) are deemed as income and taxed accordingly or if they are tax free? Does it depend on whether the premiums are paid with before/after tax money?
     
  2. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi Annee,

    Lump sums are not usually taxed outside of superannuation (Life, TPD and Trauma). Life and TPD inside superannuation could potentially be taxed to the beneficiary, eg, adult son/daughter. Also there are potential anti-detriment payments.

    Easiest way to remember it is, if you get a tax deduction for it, it is usually taxable. Eg, premiums for inside superannuation is classified as an expense for the super fund, income protection is tax deductible as the ongoing payments are taxable as income.

    Cheers,

    Dan