Life insurance

Ownership/Purpose	Tax treatment
Ownership/Purpose	Premiums	Benefits
Individual for personal purposes – premiums paid by individual	Non-deductible	Generally a capital payment – CGT exempt if paid to original policy owner or policy acquired for no consideration
Individual for personal purposes – premiums paid by employer	Fringe benefits tax (FBT) may apply – premium and FBT (if any) are generally deductible to employer	Generally a capital payment – CGT exempt if paid to original policy owner or policy acquired for no consideration
Trustee of super fund to provide benefits for insured member/death benefits	Deductible2	Payment to fund: generally a capital payment – CGT exempt Payment from fund: subject to a condition of release being met taxed as lump sum death benefit or death benefit income stream tax free if paid to member because of terminal medical condition
Trustee of super fund for other purposes eg liquidity/debt repayment1	Non-deductible	Payment to fund: generally a capital payment – CGT exempt There may be further tax consequences depending on use of payment within the fund
Business entity for revenue purposes eg key person revenue cover	Deductible	Generally ordinary income of business entity
Business entity or individual for capital purposes eg buy/sell agreements	Non-deductible	Generally a capital payment – CGT exempt if paid to original beneficial owner or policy acquired for no consideration

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