Can business claim income protection insurance for associates as a business expense?

 Author: JodieR_ATO(Community Support)Community Support

13 June 2022

Hi @rainbow123,

The income protection premium should be tax deductible to the employer/company. This is because under section 8.1 of the Income Tax Assessment Act 1997, premiums may be tax deductible for the employer if:

• The expense is considered to be part of the employee’s remuneration, and
• The premium expense is necessarily incurred in carrying on a business for the purpose of gaining or producing the business’ assessable income (regardless of whether assessable income is actually produced). 

The premium will not be subject to FBT for the employer as the premiums would be otherwise deductible to the client if they were paying the premiums personally (as per section 52 of the Fringe Benefits Tax Assessment Act 1986).