Insuring your business

Is insurance tax deductible?

10 May 2023

The following information is general in nature and has not considered your individual circumstances and is subject to change from time to time. Consult the Australian Tax Office (ATO) or your registered tax advisor to understand if these tips are applicable to you.

Ever wondered if you’re getting the most out of your tax return? Depending on your individual or business’s circumstances, you could be entitled to claim a deduction for a number of insurance products.

4 insurance policies that may be tax deductible

Business insurance

According to the Australian Taxation Office (ATO), you may be able to claim deductions for most operating expenses in the same income year you incur them. Insurance premiums are included in the ATO’s definition of operating expenses. However, be sure to seek independent tax advice related to your individual circumstances.

More about GIO's Small Business Insurance options

Income protection insurance

You can generally claim a deduction for income protection insurance if it’s taken out as a separate policy from your superannuation. Your super fund should be claiming allowable deductions for income protection purchased through super.

Car Insurance

You may be able to claim your Car Insurance if you use your vehicle in performing your job or in running your business. If you use the log-book method, you can generally claim the work-related percentage of your car insurance as a deduction. The cents per kilometre method incorporates all costs, so there is no separate deduction for car insurance if you use this method. Consult the ATO website or your tax adviser for more detail on each of the methods.

Home Insurance

You could claim a portion of your Home Insurance if you run a business out of your home. The ATO says that you can claim occupancy expenses if your home is your principal workplace and you have a dedicated work area. Find out more from the ATO about home office expenses.

Tax Audit Insurance

It’s important to be well prepared in the event of an audit by the ATO. When the ATO believes there could be a discrepancy between your declared financial position and your actual financial position, you may be required to provide financial records for a certain time period or financial year.

Should a discrepancy be discovered, an audit can result in the ATO leveraging fines or additional taxes against your business. Having Tax Audit or Tax Probe Insurance can help you manage the associated risks and costs of such audits.

That’s why GIO offers Tax Probe cover as part of its Retail Insurance policy. This provides cover for the professional fees associated with audits and other official investigations.

Compared to the potentially significant costs to your business that an audit may involve, the cost of Tax Probe cover is low.

Get a copy of your tax invoice online

It’s quick and easy for eligible customers. You don’t even need to log in! Simply provide your name, date of birth, and phone number to receive your tax invoice in moments.

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Other tax tips

Deductions must be directly related to earning your income. Deductions may need to be apportioned between personal and work use. For example, if you are making a claim for a phone that is used for both personal and work purposes, you must only claim for the work-related usage.

You need to retain records to support your deductions. Records includes receipts and invoices for equipment or asset purchases and sales; expense claims and repairs; payment summaries; sufficiently detailed bank statements; contracts; and tenant rental records.

If you have purchased any assets for your business during the income year, then the Temporary Full Expensing (TFE) measures may be applicable. Under the TFE measures, eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose. The TFE measures are applicable until 30 June 2023 and apply differently to both new and second-hand assets. Find out more about the TFE measures and whether your business qualifies here.

Personal contributions to your superannuation from your after-tax income are tax deductible for most people under 75. In order to claim the deduction, a section 290-170 form must be completed before you lodge a tax return, and you’ll need acknowledgement of receipt of the form from the trustee of your fund. The ATO has the forms and nitty-gritty details here. You should check how this applies to your personal circumstances.

Remember to claim for depreciation on work-related depreciating assets, if you’re eligible to do so. That’s things like computers, equipment, vehicles, and furniture. Find out more about depreciating assets here.

Make sure you lodge your tax return by October 31, unless you have engaged a tax agent. If you owe the ATO money, you might face penalities and interest if you fail to lodge and pay by the relevant due dates.

If you wait until August or September to submit your claim, a lot of information should be already filled out on your tax return form online through myGov, saving you time and reducing the chance of mistakes.

Check out the ATO website for more information on tax deductions.

The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries. Consult the ATO or your registered tax advisor to understand if these tips are applicable to you or how they apply to your personal circumstances.

Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Read the relevant Product Disclosure Statement before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it

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