Macquarie welcomes clarity around insurance in superannuation
Recently issued income tax regulations clarify the extent to which super fund trustees can claim tax deductions for life and disability insurance premiums, which Macquarie Adviser Services executive director David Shirlow said will help create clear boundaries around the types of insurance that should be held inside and outside of super.
The regulations provide a default means of claiming a deduction for trustees whose insurance policies do not clearly define the deductible portion of the premium, Shirlow said. They also prescribe the percentage of premiums which are deductible in some typical insurance arrangements, he said.
The regulations are picking up a number of positive improvements advocated by the super industry, including more flexibility in the range of additional features [total and permanent disablement] policies can have, without diluting the level of deduction available, Shirlow said.
Shirlow also pointed out that for fund members to optimise the efficiencies of their life and disability insurance and ensure benefits are available for release, policies need to comply with current conditions of release.
Previous rule changes make it clear that disability insurance premiums are tax deductible for super fund trustees only to the extent that the insurance proceeds can be paid immediately to the relevant fund member by the trustee, according to Macquarie.
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