F Death or disability premiums

Show at F the deduction for insurance premiums paid by a complying superannuation fund to provide superannuation benefits upon the death or temporary or permanent disability of the member.

A fund may use a variety of life insurance policies to provide these benefits, with the allowable deduction being:

• 30% of the premium where the policy is a whole-of-life policy
• 10% of the premium paid where the policy is an endowment policy, or
• for both whole-of-life and endowment policies, the part of a premium that is specified in the policy as being wholly for the liability to provide death or disability superannuation benefits.

An actuarial certificate is not required in the above circumstances.

For all other insurance policies, a complying fund can deduct the premium (or part thereof) that is attributable to the liability to provide death or disability superannuation benefits. An actuarial certificate is required in order to obtain this deduction.

A complying fund may also deduct premiums on insurance policies to replace income during periods of temporary disability.

For more information, see Taxation Determination TD 2007/3 Income tax: is a deduction allowable to complying superannuation funds under section 279 of the Income Tax Assessment Act 1936, for insurance premiums attributable to the provision of benefits for members in the event of temporary disability longer than two years?

In the case of funds that self-insure, the deduction is equal to a reasonable arm's length premium, rather than the lowest arm's length premium, for the cost of death and disability cover provided. An actuarial certificate is also required.

Rather than claiming a deduction for insurance premiums paid, a complying fund may choose to deduct an amount for its future liability to pay death or disability superannuation benefits (section 295-470 of the ITAA 1997). Deductions for this amount should be included at F.