Business Insurance — Australia Tax Rules

Claim professional indemnity, public liability, and other business insurance premiums.

Claimable: Fully claimable · Tax authority: ATO

ATO Rules

• Professional indemnity insurance is fully deductible as a business expense.
• Public liability insurance is fully deductible.
• Income protection insurance premiums are deductible in Australia — a key advantage over UK and Ireland.
• Business equipment, tools, and contents insurance is fully claimable.
• Business interruption insurance is deductible.
• Personal insurance (health, home for private use, personal life insurance) is NOT deductible as a business expense.

Limits

No cap — all business insurance premiums are fully deductible. Income protection insurance payouts are assessable income when received.

Worked Example

Chloe pays $600/year for professional indemnity, $350 for public liability, $900 for income protection, and $250 for business equipment insurance. Total claim: $2,100. Note: if she makes a claim on the income protection policy, the payout is taxable income.

Record Keeping

• Keep insurance policy documents and annual renewal certificates
• Record premium payment dates and amounts
• Ensure policies are for business or income protection purposes
• Separate business policies from personal insurance
• If GST-registered: note that general insurance premiums include GST — claim the credit on your BAS

Frequently Asked Questions

Is income protection insurance deductible in Australia?

Yes. Unlike the UK and Ireland, income protection insurance premiums are tax-deductible in Australia for self-employed individuals. However, if you make a claim and receive benefit payments under the policy, those payments are assessable income — you pay tax on them.

Can I claim a proportion of car insurance?

If using the logbook method for car expenses, the business proportion of comprehensive car insurance is included in your motor vehicle claim. If using the cents per km method, insurance is already covered by the 88c/km rate — don't claim separately.

Is cyber insurance deductible?

Yes. Cyber liability and data breach insurance for your business is a fully deductible business expense.

Does insurance include GST?

Yes. Most general insurance premiums include GST. If you are GST-registered, claim the GST component back as an input tax credit on your BAS. The deduction in your income tax return is then the GST-exclusive premium amount. Life insurance and income protection insurance are input-taxed (no GST).