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 are 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.