Now is the perfect time to take out Income Protection Insurance
Announcement posted by Life Insurance Direct 15 May 2013
Did you know that income protection premiums are tax deductible? As the Australian Taxation Office views income protection as being ‘income protecting’ in nature, they generally allow for the deduction of your premiums against your personal exertion income.
Therefore, as we approach the end of the financial year, now is the perfect time to take out income protection and qualify for the deduction before June 30 and Life Insurance Direct can help!
How much can I claim?
The amount you can claim will depend on your marginal rate of tax. The 2012/13 marginal tax rates are outlined in the table below:
|
Taxable Income |
Tax on this income |
|
0 - $18,200 |
$0 |
|
$18,201 - $37,000 |
19c for each $1 over $18,200 |
|
$37,001 - $80,000 |
$3,572 plus 32.5c for each $1 over $37,000 |
|
$80,001 - $180,000 |
$17,547 plus 37c for each $1 over $80,000 |
|
$180,001 and over |
$54,547 plus 45c for each $1 over $180,001 |
Source: ATO website, 26th April 2013
If you are earning between $37,001 and $80,000, you will receive approximately 32.5 cents back for each $1 of income protection premium you spend.
For example, if your income protection premiums cost you $1,000 per year, you can expect to receive back approximately $325 following the lodging of your tax return.
How do I claim the deduction?
The deduction is claimable when you complete your tax return at the end of the financial year.
Step 1: Make sure you have received a statement from your insurance company detailing the premium amount that is tax deductible. These statements are usually sent out in July or August.
Step 2: Speak to your accountant or tax agent regarding your income protection premiums
Step 3: Include all relevant paperwork, including the statement from your insurance company, in all documentation you submit to your accountant or tax agent.
Step 4: Alternatively if you are completing your own tax return, visit the ATO website to find out where you need to include your income protection premium details.
If in doubt, it is always advisable to speak to your tax agent or accountant before making any decisions.
For more information, visit www.lifeinsurancedirect.com.au, call us on 1300 882 762 or contact the ATO or your accountant.