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From July 2011, the tax deductibility of Total and Permanent Disability Premiums under superannuation will no longer apply to “Own Occupation” TPD policies.
The premiums on TPD policies used to be viewed as being fully deductible to a super fund. In 2008 this view has been challenged by the ATO.
The ATO’s National Tax Liaison Group expressed in March 2008 that not all TPD premiums should be deductible to super funds. Only those premiums which would result in a payment that would meet the definition of “superannuation disability benefit” would be deductible. The definition of a “superannuation disability benefit” requires that a person be unable to work in a job for which they are “reasonably qualified by education, training or experience”.
Where this causes a problem is when a person wishes to be paid a benefit should they be unable to do their own job (i.e. an own occupation definition policy). If a person is unable to do their own job but is able to do another for which they are qualified, their situation will not meet the definition of a superannuation disability benefit.
There are some great new products in the market that allow you to hold an “any occupation” TPD policy in your super fund and have an “own occupation” linked policy outside of superannuation. This allows you to have the best of both worlds by retaining the cover you need and maintaining the tax deductibility.
For more information, check your policy or to schedule a review, contact Tudor Investassure on 02 9417 6011 today.
In : Life Insurance
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Responsibility for the content and opinions expressed herein rests solely with the author and opinions expressed do not necessarily represent the views and opinions of Professional Wealth Services Pty Ltd. The information on this website is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product. This information is for Australian residents only. Whilst care has been exercised, the taxation information contained is provided as a guide only and may not be relied upon. If in doubt, you should seek independent tax advice from a qualified tax adviser.
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