The deductibility of risk insurance premiums for policies held inside superannuation funds has now been further clarified and made easier to understand. New income tax rules handed down this week have clarified the tax deductibility of insurance premiums taken out inside of superannuation funds. These recent changes to the rules have been a result of a consultative process with the financial services industry.
The new regulations prescribe the percentage of premiums which are deductible in some typical insurance arrangements. The regulations now offer superannuation trustees to have the ability to determine the deduction they can claim if their risk policy does not stipulate the deduction proportion and they do not have an actuarial certificate determining the deductible amount. The new regulations apply for the current 2012 financial year and future income years. As an example, a own occupation TPD (total and permanent disablement) policy for a member can rely on the regulations to claim a deduction for 67 per cent of the premium.
The new regulations have added increased flexibility in the range of additional features TPD policies can have, without diluting the tax deductibility available, which is seen as a move in the right direction.
