Shield Your Tax Breaks with Income Protection Insurance - Rate Detective Gives Insider Tips

Melbourne, Australia, July 07, 2011 --(PR.com)-- Income protection insurance is one of the few types of insurance that is deductible for ordinary wage earners. The ATO ruled in 2001 that because the premiums were designed to be "used in the production of assessable income," taxpayers were entitled to claim them as a deduction on their tax return. Insurance industry watchdog and leading consumer comparison service, Rate Detective, recently published their list of insider tips to help people save time and arrange their income insurance tax deduction to best benefit them.

With several days to go before the end of the financial year, leading insurance comparison service Rate Detective has released a list of strategies relating to claiming income protection insurance as a tax deduction.

The income protection insurance experts recommend that Australians optimise their tax deduction for their policy by:

Remembering to claim. Rate Detective notes that many accountants forget to ask whether their clients have an income protection plan - policyholders should be proactive about claiming.

Taking out your insurance as early as possible in the financial year, or paying your bill annually in order to maximise your insured time and therefore your tax break.

Don't claim business income protection insurance on your personal tax return for small businesses.

Knowing how your tax obligations will change in the next financial year. Meeting with your accountant can help you determine whether you should bring expenses forward into the current financial year, or delay them until next year.

If you want to significantly reduce your taxable income for the current financial year, consider taking out a policy with level premiums. These have higher than usual premiums to begin with, but become cheaper and more cost-effective as time goes on.

"We don't recommend that people take out income protection insurance purely as a tax minimisation strategy, though," said David Kaplan, director of Rate Detective. "Nor should they pay more than necessary in order to maximise a tax deduction - it simply isn't financially effective," Mr. Kaplan continued.

Mr. Kaplan also reminded income protection insurance holders that premiums for policies administered through superannuation funds are not usually tax deductible, because they are paid from your pre-tax income anyway.

Additionally, premiums paid for trauma insurance and life insurance are not usually deductible. Although they are lump sum benefits designed to replace income, they can be paid while you are still earning income.

About Rate Detective
Established in 2007, Rate Detective (Rate Detective Pty Ltd) is a rate comparison website which provides free information to consumers about home loans, credit cards, personal loans and personal insurance.

Rate Detective is run by a team of experienced financial industry and IT professionals, led by director David Kaplan. The company has plans to introduce more products to its comparison site including mobile phone plans and health insurance in the future.

In addition to the comprehensive database, Rate Detective publishes original stories on personal financial topics to enable consumers to remain informed no matter what their financial status is. Whether they are buying their first home, getting a new credit card, or saving for a holiday, Ratedetective.com.au has the tools and resources to help. These resources include a set of financial calculators designed specifically for the Australian market.

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