Income Protection – Tax Deductible for the Business, is there GST and is it Taxable when Paid?

Income Protection – Tax Deductible for the Business, is there GST and is it taxable when paid?
Income Protection – Tax Deductible for the Business, is there GST and is it Taxable when Paid?

For many small to medium business it is crucial to take their central role as the main source of income seriously and protect it. Income protection insurance premiums are generally tax deductible for the business, but payments paid are taxable in the hands of the receiver when paid. There is NO GST on Income Protection premiums (nor on life insurance or private health premiums, as they are classed as financial services – GST is included in general insurances such as home and car insurance).

Income protection pays you a lump sum benefit of up to 75% of your gross income if you have become unable to work due to an illness or accident. It is to pay or provide a steady income every month so that you can focus more on the most important thing – your fast recovery.

Income protection can help you pay for many things including:

  • Mortgage and other debt repayments;
  • Basic household lifestyle;
  • Daily expenses, such as bills and food;
  • Rent or costs of maintenance costs.

As to how much income protection you need, depends on your current income – you can receive regular monthly payments of around 75 to 80 percent of your average salary before you became incapacitated, which should be enough to see you through until you can return to work. Another consideration is how long you want the benefits to be paid, which is unknown of course. You also need to consider the  (or company or business) you are entitled to, because after that, the income protection insurance can take over, and you want that to be as long as you can afford. So a quote on the payments (premiums) for different lengths of time is required. Income protection cover is usually only available from providers until you are aged 65, depending on the company.

Why not get a quote and know your options? It is FREE and there are no obligations you will be able to compare several offers and the premium prices. Call us and we can refer you to independent brokers in our trusted network who would be happy to assist you. Call today and be prepared! Ph 0407 361 596

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