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  • Income protection insurance

    You can claim a deduction for the cost of premiums you pay for insurance against the loss of your employment income. Only the premiums you pay to protect your income are deductible. This is known as income protection of continuing salary cover.

    You must include any payment you receive under an income protection policy in your tax return.

    You can't claim a deduction, if the policy

    • you take out is through your superannuation fund and the premiums is deducted from your contributions
    • pays you a capital sum to compensate you for injury.

    For example, you can't claim a deduction for:

    • life insurance premiums
    • trauma insurance premiums
    • critical care insurance premiums.

    Example: policy premiums for income protections and injury

    Deanne takes out an income protection and personal injury policy through her insurer. She pays a total of $250 a month for the policy. $175 of the premium Deanne pays is for income protection cover and $75 is for the personal injury cover.

    Deanne can claim $175 a month for the insurance policy. The remaining $75 is not deductible, because it is capital in nature.

    End of example

    See also:

    Last modified: 11 Aug 2021QC 31905