Consultant Watson Wyatt has called for more consistency from the Government in the tax treatment of insurance premiums irrespective of whether or not they are provided by an employer or a super fund.
A recent tax ruling by the Australian Taxation Office (ATO) now enables superannuation funds to claim a deduction on premiums covering temporary disability benefits that last longer than two years. Previously funds had only been able to provide temporary disability payments, or income protection insurance, for periods of two years as part of their insurance offerings for members. However employers will not be able to claim a similar deductions on insurance premiums for employees provided outside of superannuation, according to Brad Jeffrey, head of Watson Wyatt’s actuarial and employee consulting benefits practice. “Superannuation funds are entitled to a full tax deduction in respect of the premiums they pay to provide death and TPD cover for their members. However, the same tax treatment doesn’t necessarily apply to the premiums that employers pay for exactly the same death and TPD cover for their employees,” he said in a statement. Jeffrey called for the same tax treatment for insurance premiums when that cover was paid by an employer rather than a fund. This would assist in consistent cover being applied for an employee irrespective of the fund an employee chose to belong to. “This is even more important now in the era of choice of fund, as employers no longer have the ability to ensure that their employees are well covered for insurance when they exercise choice and select their own superannuation fund,” he said.
The changing nature of volatility in financial markets and a more client-centric approach that allows allocations to be tailored is helping more institutions adopt a total portfolio approach to investment management, the Fiduciary Investors Symposium at Stanford University has heard.
Prashant MehraOctober 8, 2024
