ATO ruling helps funds on insurance

A recent ruling by the Australian Taxation Office (ATO) has made it more attractive for superannuation funds to provide salary continuance insurance.

An ATO ruling handed down in late March allows complying superannuation funds to claim a deduction for premiums on insurance policies providing disability cover lasting longer than two years.

The ATO said a deduction would be allowable where the insurance premiums related to benefits payable for a period potentially exceeding two years, provided the benefits resulting from the insurance policy comply with the requirements of the Superannuation Industry (Supervision) Act (SIS Act).

The Association of Superannuation Funds of Australia has welcomed the ATO ruling, pointing out that the tax office had previously denied deductibility of insurance premiums for policies that provide temporary disability payments exceeding two years.

It said the current determination did not impose any time limit, enabling funds to claim deductibility on premiums of policies where the payment of temporary disability benefits can exceed two years.