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Edited version of your private ruling
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Ruling
Subject: Income protection insurance premiums deduction
Questions:
Are you eligible to claim a deduction for income protection insurance premiums paid to a superannuation fund?
Advice/Answers:
No.
This ruling applies for the following period:
1 July 2005 to 30 June 2012
The scheme commenced on:
1 July 2005
Relevant facts:
You are a member of a large superannuation (the Fund).
The Fund provides an income protection cover policy (the Policy) as part of its member benefits.
The insurance provider for Fund is an overseas assurance company.
The Fund has advised the insurance Cover on a member's account is in the member's name but the cover is a group life cover offered through the insurance company to the Fund's members and the policy is owned by the Fund.
The premiums for the policy are deducted from your member account within the Fund
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Summary
The insurance policy is owned by the Fund as a group cover and therefore is not owned by you. Superannuation funds pay their expenses by deducting various amounts from each members account.
You are not eligible to claim a deduction for premiums relating to income protection insurance as they are expenses of the superannuation fund.
Detailed reasoning
As described in the facts, you have an income protection policy attached to your member account in the Fund. The insurance provider for the Fund is an overseas assurance company.
Although the premiums for this policy are deducted from your member account, the policy is actually owned by the Fund as it is a group life cover. It is not an individual policy owned by you and it is the Fund that pays the premiums to the overseas company. Superannuation funds pay their expenses such as income tax, insurance and administrative costs by deducting various amounts from each member's account. Similarly, a fund's assessable income includes the contributions made for its members.
As the expense is not yours, you cannot claim a deduction.
Conclusion
You are not eligible to claim a deduction for premiums relating to income protection insurance paid by your superannuation fund.