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  • F Death or disability premiums

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    Show at F the deduction for insurance premiums paid by a complying superannuation fund to provide superannuation benefits upon the death, existence of a terminal medical condition or temporary or permanent disability of the member.

    A fund may use a variety of life insurance policies to provide these benefits. The fund can deduct the following:

    • 30% of the premium for a whole-of-life policy if all the individuals whose lives are insured are members of the fund; for more information on what a 'whole-of-life policy' is for these purposes see ATO ID 2009/100External Link Complying superannuation fund: deductibility of premiums on 'whole-of-life policy' - subsection 295-465(1) of the ITAA 1997
    • 10% of the premium for an endowment policy if all the individuals whose lives are insured are members of the fund
    • for a policy that is not a whole-of-life or endowment policy  
      • 30% of the part of an insurance policy premium that is specified in the policy as being for a distinct part of the policy that would have been a whole-of-life policy if it had been a separate policy
      • 10% of the part of an insurance policy premium that is specified in the policy as being for a distinct part of the policy that would have been an endowment policy if it had been a separate policy
       
    • the part of a premium that is specified in an insurance policy as being wholly for the liability to provide certain death, terminal medical condition or disability benefits, as described in section 295-460 of the ITAA 1997, for fund members
    • the proportion of the premium that is specified in the regulations as being attributable to the liability to provide death or disability superannuation benefits for fund members, as described in section 295-460 of the ITAA 1997.  
      • These deductible proportions are:
       

    for an insurance policy that provides…

    the fund can deduct…

    TPD any occupation cover

    100%

    TPD any occupation cover with one or more of the following inclusions:

    • activities of daily living
    • cognitive loss
    • loss of limb
    • domestic (home) duties

     

    100%

    TPD own occupation cover

    67%

    TPD own occupation cover with one of more of the following inclusions:

    • activities of daily living
    • cognitive loss
    • loss of limb
    • domestic (home) duties

     

    67%

    TPD own occupation cover bundled with death (life) cover

    80%

    TPD own occupation cover bundled with death (life) cover with one or more of the following inclusions:

    • activities of daily living
    • cognitive loss
    • loss of limb
    • domestic (home) duties.

     

    80%

    An actuarial certificate is not required to deduct the premium, or a proportion of the premium, as specified in the table above.

    The fund may deduct a proportion other than that specified in the regulations for the premium, but must obtain an actuary’s certificate to do so.

    For any other insurance policy premium that is not deductible in accordance with the above circumstances, an actuarial certificate is also required to deduct all or a proportion of the premium for a policy that is to provide superannuation benefits upon the death, existence of a terminal medical condition or disability of the member.

    A complying fund may also deduct premiums on insurance policies to replace income during periods of temporary disability.

    If a fund self-insures, and does not have insurance coverage for its liabilities to provide superannuation benefits upon the death, existence of a terminal medical condition or temporary or permanent disability of the member a deduction is allowable. The deduction is allowable for an amount equal to what the fund could expect to pay in an arm’s length transaction to obtain an insurance policy to cover these liabilities. An actuarial certificate is required for the amount to be deductible.

    If an actuary certifies the amount a fund could reasonably expect to pay in an arm’s length transaction to obtain an insurance policy, and that policy covers liabilities of the fund that are broader than those covered in section 295-460 of the ITAA 1997 and the insurance policy is specified in the regulations then the fund may deduct so much of that certified amount as is specified in the regulations.

    Rather than claiming a deduction for insurance premiums paid or an amount under the self-insurance provisions, a complying fund may choose to deduct (under section 295-470 of the ITAA 1997) an amount based on a formula for payments for the income year for death, terminal medical condition or disability superannuation benefits. Deductions for this amount should be included at F.

    See also:

    • Taxation Ruling TR 2012/6External Link Income tax: deductibility under subsection 295-465(1) of the Income Tax Assessment Act 1997 of premiums paid by a complying superannuation fund for an insurance policy providing Total and Permanent Disability cover in respect of its members.
    • Taxation Determination TD 2007/3External Link Income tax: is a deduction allowable to complying superannuation funds, under section 279 of the Income Tax Assessment Act 1936, for insurance premiums attributable to the provision of benefits for members in the event of temporary disability longer than two year?
    Last modified: 02 Jun 2014QC 35420