SMSF Income Protection

Holding your income protection policy through your SMSF can be extremely advantageous.

Most Income protection policies will generally pay up to 75% of your earnings at the time you make the claim, however with careful structuring within a SMSF you may be able to protect a higher percentage of your income.

If your SMSF makes a claim for income protection on your behalf, the proceeds of the claim will be assessable for tax. Money paid to you will also generally be assessable for tax, but you will usually be able to claim a rebate for tax already paid by the fund.

If your income protection payments remain in the SMSF and end up being distributed to your financial dependents on your death, they will generally be tax-free even though the SMSF claimed a tax deduction for the premium.

Some insurance policies do not allow ownership within an SMSF. Contact your accountant or financial advisor for advice on the best way to structure your insurance.