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Salary continuance insurance question.

Discussion in 'Superannuation, SMSF & Personal Insurance' started by gad, 4th Mar, 2006.

  1. gad

    gad Well-Known Member

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    I have a question in regard to the tax deductibility of salary continuance insurance.

    I do believe this type of insurance is tax deductible.

    Apart from Death & TPD insurance, the salary continuance insurance is being paid for from my employer’s compulsory superannuation payments.

    Am I still entitled to claim the salary continuance proportion even though it’s been paid for from my employer’s compulsory super contributions?

    I believe the compulsory super contributions make up part of my over all wages so I’m thinking I should be able to claim those payments but am not sure.

    Thanks
     
  2. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    gad,

    No to the best of my knowledge, the inc pro insurance throgh super is not tax deductible. It also *may* not be taxable, I don't know.

    However, you need to realise that inc pro through super only protects you for two years max so you need to get insurance outside super as well to cover you to 65. This insurance is tax deductible, but is also taxable.

    Mark
     
  3. gad

    gad Well-Known Member

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    Thanks Mark
     
  4. Ol School Skata

    Ol School Skata Well-Known Member

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    I have my super with macquarie and they can offer me a 5 year benefit period for income protection insurance? When i heard of this thought it was unusual? Have you heard of this or does anyone else have it? Is it legislation that it be limited to 2 years?

    OSS
     
  5. gazza

    gazza Well-Known Member

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    Not sure if I am talking about the same thing but I have income protection insurance that I pay for (not my SMSF). It is tax deductable and covers me until the age of 65 (which I am happy to say is more than 2 or 5 years away :) ). The length of cover ie until what age, amount of cover (up to 75% of your annual income)and period you have to wait before payments kick in, are all negotiable and affect the premiums charged.

    Gazza
     
  6. Alexandria

    Alexandria Member

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    Hi, In my experience (of the Salary Continuance plans I look after), the premium is tax-deductible but only to the employer or whomever pays the premium.
     
  7. Alexandria

    Alexandria Member

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    Location:
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    Depends on the insurer and the policy type...some can do within super to age 65
     
  8. AsxBroker

    AsxBroker Well-Known Member

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    Sydney, NSW
    Hi Gad,

    SGC contributions are not deductible to you as your employer gets to claim the tax deduction.

    If you were paying the Income Protection premium from your bank account, Bpay or credit card you would be able to claim a tax deduction in your annual tax return.

    All insurance premiums are tax deductible to your superannuation fund, so it's essentially paying the money in tax free dollars for Life, TPD and TSC/Income Protection. For TSC/Income Protection as it is tax deductible in both your super and your own name you have to figure out which is more preferable.

    If your already making the maximum deductible/salary sacrificing amount you'd probably prefer to have it in your own name to reduce your taxable income further.

    Keep in mind that TSC/Income Protection inside superannuation is very no-frills compared to the features available for TSC/Income Protection outside of super. If those features aren't something that bother you (and rest assured you pay extra premiums for the extra bells and whistles) don't worry about it.

    Tax deductions inside superannuation were extended from 1st July 2006 for TSC/Income Protection so it is up to the superannuation fund to offer it. It is highly unlikely that cover automatically given to members has a Benefit Period to Age 65 due to being new and corporate superannuation policies (majority) haven't updated their mandates to cover to Age 65.

    Cheers,

    Dan

    PS Before making an investment decision speak to your FPA registered Financial Planner.