New income tax rules handed down this week have clarified the tax deductibility of insurance premiums for risk cover taken inside a superannuation fund.
"The new regulations prescribe the percentage of premiums which are deductible in some typical insurance arrangements," Macquarie Adviser Services executive director David Shirlow said.
"For example, a trustee who holds a straightforward 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 regulations apply for the current and future income years, and will be welcomed by trustees who rely on them for a tax deduction," he added.
According to Shirlow, the nature of the new regulations mean superannuation fund trustees will now have an extra facility alerting them to the deduction they can claim if their risk policy does not stipulate the deductible portion of the premium and they do not have an actuarial certificate determining the deductible amount either.
The new regulations follow earlier changes to the law that declared disability premiums paid within a super fund tax deductible only if the proceeds of a claim could be paid out to members immediately.
The most recent changes to the rules have been the result of a consultative process with the financial services industry.
"The consultation process has been a productive one, with the regulations picking up a number of positive improvements advocated by the super industry, including more flexibility in the range of additional features TPD policies can have, without diluting the level of deduction available," Shirlow said.
