Hello
I have query raised by client as per below. May I request correct/acceptable accounting treatment on below two questions
Question 1
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Company X has policy for its employees which covers critical illness/income protection for its employees. An employee Mr Y has been traumatised and lodge claim which is approved by insurer. Assuming policy is under compan, claim money will be received by company, which then will need to be transferred to employee. Can anyone confirm on below
1) Will this be an income for company ?
2)Can company claim deduction on the amount which then transfer to employee?
3)Will company need to pay employee as wages and deduct the tax?
4) Will this income taxable in the hands of employees?
5) Assuming, Due to critical illness employee will not be able to work. The lump sum received to employee is taxable or tax free?
6)When company pay premium for employee policy, does company require to lodge FBT return? (Is this fall under Fringe benefit?)
Question 2
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If the policy is under employee name which covers Income protection and Critical illness, employee pays the premium
1) Does this premium tax deductible?
2) Assuming employee has critical illness and lodged the claim which is approved, the lump sum received by an employee is taxable?
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