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Are Life Insurance Premiums Tax Deductible?

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Are Life Insurance Premiums Tax Deductible?


Where the life insurance is provided through a superannuation fund, contributions made to fund insurance premiums are tax deductible for self employed persons and substantially self-employed persons and employers.

However where life insurance is held outside of the superannuation environment, the premiums are generally not tax deductible.

For insurance through a superannuation fund, the annual deductible contributions to the superannuation funds are subject to age limits. These limits are indexed annually to movements in Average Weekly Ordinary Time Earnings. For 2004/2005 the limits are:

Age Range                            Annual Limit
Less than 35                             $13,934
35 and less than 50                  $38,704
Over 50                                    $95,980

These limits apply to employers making deductible contributions. They also apply to self-employed persons and substantially self-employed persons.

Included in these overall limits are insurance premiums. This means that no additional deductible contributions can be made for the funding of insurance premiums. Insurance premiums can, however, be funded by undeducted contributions.

For further information on deductible contributions see “under what conditions can an employer claim a deduction for contributions made on behalf of their employees?” and “what is the definition of substantially self employed?”

The insurance premium paid by the superannuation fund can be claimed by the fund as a deduction to reduce the 15% tax on contributions and earnings.

Ref: ITAA 1936, Section 279

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