This article explores how Australian tradies can claim public liability insurance premiums as tax deductions. It breaks down the eligibility criteria, the process for claiming, and the importance of accurate record-keeping to maximise tax benefits and ensure compliance.
Are you leaving money on the table by not claiming all your tax deductions?
If you're a tradie in Australia, you're no stranger to the costs of running your business espeically when it comes to tools, vehicle maintenance, and insurance. We know that all of those things do add up quickly. That being said, did you know that your public liability insurance premiums might qualify as a tax deduction? Yep, that's right! Let’s break down what you need to know to maximise your tax savings and avoid missing out.
Can Public Liability Insurance Be Claimed on Tax?
Yes, it can! According to the ATO, any sort of expense directly related to generating your income can be deducted from your taxable income. Public liability insurance is technically considered a business expense because it protects you financially if a claim is made against you for property damage or injury caused by your work.
"Public liability insurance taken out for income-producing purposes is generally deductible under ITAA97 s8-1."
— Australian Taxation Office
Think of it this way...the premium you pay for public liability insurance isn’t just a safeguard for your business. It’s also an opportunity to reduce your taxable income, and honestly, who doesn’t want to keep more money in their pocket? I know I do.
How Do You Claim Public Liability Insurance as a Deduction?
Claiming your public liability insurance premiums isn’t complicated, but you need to get it right. Here’s a step-by-step guide to help:
- Check if your policy is directly related to income-earning activities. If you’re a sole trader, this would usually apply to you.
- Make sure to keep all your receipts and invoices. We know this can be hard, but definitely worth it in the long run. The ATO requires proof of payment for every deduction you claim.
- Include any premiums in the "Other Work-Related Expenses" section of your tax return.
If you’re unsure about the specifics, don’t hesitate to talk to a tax professional, they'd be more than happy to help you. A quick consultation can save you a headache later.
Important Insight
Many tradies overlook the tax deductibility of their public liability insurance premiums, potentially missing out on significant tax savings each year.
What About Other Types of Insurance?
Not all insurance premiums are deductible. For example:
- Life Insurance: Premiums for life insurance are not tax-deductible.
- Trauma Insurance: Similarly, premiums for trauma or critical care insurance cannot be claimed on your tax return.
But here’s the good news. There are other policies, like Professional Indemnity Insurance and Public and Product Liability Insurance, that might also qualify for deductions - check out our pages to get a better idea if it's something for you. It’s worth exploring these options to see where else you can save.
What Happens If You Don’t Claim?
By not claiming, you’re essentially giving away free money to the tax office. Think about it...why pay more tax than you have to? Even a small deduction, like your public liability insurance premium, can add up over time. Multiply that by a few years, and the savings become significant.
Where to Get the Right Insurance
If you’re not sure where to start with public liability insurance, reach out to us at Midland Insurance. We specialise in helping tradies find the right coverage to protect their businesses and comply with tax laws. Whether you’re just starting or you’re a seasoned professional, we can help you get insured and save where it matters most.
For additional options, check out our Courier and Taxi Truck Insurance page for tailored solutions for your trade.
Written By Scott McMurtrie
Senior Insurance Broker
Scott is an accomplished Senior Insurance Broker with over 12 years of experience in designing tailored protection plans for small businesses.
Read More »»
This article explores how Australian tradies can claim public liability insurance premiums as tax deductions. It breaks down the eligibility criteria, the process for claiming, and the importance of accurate record-keeping to maximise tax benefits and ensure compliance.
Are you leaving money on the table by not claiming all your tax deductions?
If you're a tradie in Australia, you're no stranger to the costs of running your business espeically when it comes to tools, vehicle maintenance, and insurance. We know that all of those things do add up quickly. That being said, did you know that your public liability insurance premiums might qualify as a tax deduction? Yep, that's right! Let’s break down what you need to know to maximise your tax savings and avoid missing out.
Can Public Liability Insurance Be Claimed on Tax?
Yes, it can! According to the ATO, any sort of expense directly related to generating your income can be deducted from your taxable income. Public liability insurance is technically considered a business expense because it protects you financially if a claim is made against you for property damage or injury caused by your work.
"Public liability insurance taken out for income-producing purposes is generally deductible under ITAA97 s8-1."
— Australian Taxation Office
Think of it this way...the premium you pay for public liability insurance isn’t just a safeguard for your business. It’s also an opportunity to reduce your taxable income, and honestly, who doesn’t want to keep more money in their pocket? I know I do.
How Do You Claim Public Liability Insurance as a Deduction?
Claiming your public liability insurance premiums isn’t complicated, but you need to get it right. Here’s a step-by-step guide to help:
- Check if your policy is directly related to income-earning activities. If you’re a sole trader, this would usually apply to you.
- Make sure to keep all your receipts and invoices. We know this can be hard, but definitely worth it in the long run. The ATO requires proof of payment for every deduction you claim.
- Include any premiums in the "Other Work-Related Expenses" section of your tax return.
If you’re unsure about the specifics, don’t hesitate to talk to a tax professional, they'd be more than happy to help you. A quick consultation can save you a headache later.
Important Insight
Many tradies overlook the tax deductibility of their public liability insurance premiums, potentially missing out on significant tax savings each year.
What About Other Types of Insurance?
Not all insurance premiums are deductible. For example:
- Life Insurance: Premiums for life insurance are not tax-deductible.
- Trauma Insurance: Similarly, premiums for trauma or critical care insurance cannot be claimed on your tax return.
But here’s the good news. There are other policies, like Professional Indemnity Insurance and Public and Product Liability Insurance, that might also qualify for deductions - check out our pages to get a better idea if it's something for you. It’s worth exploring these options to see where else you can save.
What Happens If You Don’t Claim?
By not claiming, you’re essentially giving away free money to the tax office. Think about it...why pay more tax than you have to? Even a small deduction, like your public liability insurance premium, can add up over time. Multiply that by a few years, and the savings become significant.
Where to Get the Right Insurance
If you’re not sure where to start with public liability insurance, reach out to us at Midland Insurance. We specialise in helping tradies find the right coverage to protect their businesses and comply with tax laws. Whether you’re just starting or you’re a seasoned professional, we can help you get insured and save where it matters most.
For additional options, check out our Courier and Taxi Truck Insurance page for tailored solutions for your trade.
Written By Scott McMurtrie
Senior Insurance Broker
Scott is an accomplished Senior Insurance Broker with over 12 years of experience in designing tailored protection plans for small businesses.
Read More »»
