Is the cost of business insurance tax deductible?
In most instances, the premiums business owners pay for business insurance are tax deductible.
When it comes to claiming the cost of business insurance on tax, business owners consider the different types of insurance their business could benefit from, and buy it before the end of June to give assurance and peace of mind for the year ahead. This way it can be claimed back as a business expense to reduce taxes, to make the most of tax allowances.
What kind of business insurance can be claimed on tax?
As long as an insurance policy is separate to coverage that's included in Superannuation, and doesn't relate to physical injury or life insurance, the costs are deductible as a business expense.
To claim it must be proved that the business insurance costs are connected to the ability to earn through the business.
According to the ATO...
"You can claim the cost of any premiums you pay for insurance against the loss of your income"
What are business owners asking about insurance before the end of the financial year?
With tax time approaching, we get many questions and queries about business insurance and tax claims. Business owners are asking questions like...
Can you claim public liability insurance on tax?
Yes, if you're a registered business owner you can claim your public liability insurance costs as a business expense against your taxes.
What insurance should I buy as a sole trader?
Depending on the purpose of your business, there are different insurance requirements. For example, if you sell food or skincare products to the public then you will almost definitely need public and product liability insurance. Speak to an insurance broker about your specific needs and decide if you should buy it now and save on this year's tax allowance?
What insurance can I claim on my taxes?
If insurance is taken out to protect a business' capacity to earn an income or to protect assets, it is tax deductible. Examples of business insurance types that can be claimed are:
- Public and product liability insurance
- Professional indemnity insurance
- Workers compensation insurance
- Fire damage and theft insurance
- Business interruption insurance
- Commercial motor vehicle insurance
The broad expert knowledge of an insurance broker can be invaluable in choosing the essential and most beneficial type/s of insurance to buy before tax-time.
Find a broker to advise which insurance you should buy for tax-deductible cover.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Andy Jamieson.