Saving tax by paying for 12 months income protection insurance premiums in advance

Income protection insurance protects your income if you are unable to work for an extended period of time due to injury or illness.

If you purchase income protection insurance outside of your super fund you are able to pay for premiums in advance and claim the expense as a tax deduction in the current financial year.

An example of where this might be appropriate:

Ken (45) earns $100,000pa and would like to take out insurance to cover 75% of his salary should he be unable to work for an extended period of time due to injury or illness. He is able to claim next year's premium as a tax deduction this financial year, reducing his taxable income by $1,367 and his tax bill by $567.