Deduction of personal income protection

[Harryf]

Hi Pete!

It's been waaaay too long since I've been a visitor. So, I can't welcome you to the forum, I suppose! But I'm going to anyway!

Back to your question. The section of the Income Tax Act that deals with the deductibility of premiums on these kind of benefits basically boils down to the following: If the premium you're paying for the benefit will result in you being paid a taxable income from the benefit at claims stage and the actual premium paid for the taxable benefit can be calculated and shown by the insurer, then that premium is seen as an expense incurred in the production of an income (or a possible income, since the income may not ever become payable (by you not claiming)).

So, whether you are a salaried person (whether as an employee of your "own" Company or CC or employed by a third party) or whether you work as a sole proprietor, you are allowed to deduct the premium purely because by paying the premium you will be paid a taxable income should you ever claim for permanent disability benefits.

If you are a salaried employee, your employer may not, however, lower your income by this contribution in order to calculate your taxable income on the lowered income - you have to claim Tax back from SARS when you submit your contribution certificate with your Tax return.

I don't know whether Dave and the moderators will be happy with me and I'd like to ask them to feel free to delete this section pointing to my site, but you are welcome to have a look at my own forum dealing specifically with insurance related questions for graduated professionals, PPS, Sanlam, consequentialist ethics, BS and so forth. The address is http://www.gpforum.co.za/forum

Kind regards

Harry

[Dave A]

I don't know whether Dave and the moderators will be happy with me

It's South African, it's on topic - no problem at all, Harry. In fact you should use it in your signature.

[Harryf]

Hi Dave!

Thanks for the thumbs up!

I don't think, if I remember correctly, that I qualify for a signature just yet as I do not have enough responses or threads yet. Or rather, when I checked earlier in the year, thatw as the case.

I'll read the rules and see - unless you'd like to do the kind thing (as usual!) and inform me! Hehe - my motto is that only by doing stuff yourself does one really learn - so I'll check teh signature rules anyway!

Have a great weekend

h

[dukefaxo]

The site was very interesting and providing information about various useful topics. There is a tax deduction of personal income protection is one of the best act of the government. As stated in this act this is not applicable for all the employees and there are expectations and limitations for this also. Could you please provide some more attachments about the minimum necessities for the deduction and the required documents in case if we are the new insurance holder?

[Nickolai Naydenov]

I'm sorry Harryf but I disagree with you. You are mixing personal cover and business cover. Any life assurance comapny will pay you temporary income disability after the waiting period. The sum paid will be for number of days/months/years where you cannot perform your duties and you will receive it on a monthly basis, there's no such thing as being half able to work or somebody doing your job. Lump sum disability is paid according to the severity but not income disability. If you are the owner of a business depending on the type of policy you have there are different ways in which you can claim for specific loss so please do NOT mislead people. And yes income protection is tax deductuble but you will pay tax on the proceeds should you claim. There is no double taxation in SA so if you paying your premiums with after tax money you won't pay tax on the proceeds. PPS doesn't make the laws as to which company pays tax on what, you are advertising temporary sicness benefit which is not tax deductable by law! And just by the way I can give show you where PPS is lacking, however misleading advice contravenes the ethical behavior and the fit and proper requirements in the FAIS Act!

[Harryf]

Nickolai, you must be missing something I’s said somewhere in my posts, or you, as a Person only allowed to sell Liberty Life products, have not had the opportunity to study the PPS and Sanlam products I am talking about and are making a lot of unfortumate mistakes and assumptions in your single paragraph response.

If you were to call either PPS’ or Sanlam’s call centre, and ask them about their products providing cover against temporary disability, you’ll be able to find out just how much you did/still do not know about their products and where they are better and where they are not better than the products offered by Liberty Life.

You made a lot of statements about paying tax on incomes should one claim, double taxation (??), lump sum benefits, being half able to do a job, PPS twisting taxation laws to suit themselves, personal and business cover and various other loose statements about benefits also not part of the topic or my responses, but I am sure that once you make the phone calls and realise that PPS actually do offer the benefits I am talking about, that you will change your post as I am softening my harsh response to yours.

I am not misleading anybody, Nickolai. Nor am I worried about being fit and proper as far as the giving of advice about a product where less than 0.1% of the financial advisers out there possibly know more about than I do about the product. I have even had lengthy discussions and put written recommendations on request to Liberty Life about how to make their product (the one you sell) better than it is. I think it is purely a mistake on your part in thinking that every product has to work the way you think it should because of your (limited, possibly?) insurance view as seen from a Liberty Life perspective.

Please do not think that I am knocking Liberty Life. Their product has many great benefits, but there are even more areas where PPS are lightyears ahead of even such a great company as Liberty – my preferred product supplier for anything other than income benefits for professionals.