Taxation Determination TD 95/41







[Note: This is a consolidated version of this document. Refer to the Tax Office Legal Database (http://law.ato.gov.au) to check its currency and to view the details of all changes.]: 1. No. The premium payable under a trauma insurance policy is not an allowable deduction to an employee or self employed person. | 2. The purpose of trauma insurance is to provide a capital amount to the insured if the insured suffers a specified medical condition. The policy does not replace earnings lost by the taxpayer. | 3. The benefits payable under this type of policy do not constitute assessable income under section 6-5 of the Income Tax Assessment Act 1997 ('the 1997 Act') (formerly section 25(1) of the 1936 Act). In these circumstances, a deduction is not allowable under section 8-1 of the 1997 Act (formerly section 51(1) of the 1936 Act) as there is no connection between the payment of premiums and the production of assessable income (see FC of T v. D P Smith 81 ATC 4114; (1981) 11 ATR 538). | Note: The Addendum to this Determination that issued on 18 August 1999 applies in relation to the 1997-98 or a later income year. | Commissioner of Taxation 9 August 1995 | Previously issued as Draft TD 94/D51


Related rulings: TD 95/39 TD 95/40 TD 95/42 TD 95/43
Legislative references: ITAA 1997 6-5 ITAA 1997 8-1
Case references: FC of T v. D P Smith 81 ATC 4114 (1981) 11 ATR 538
Subject references: accident and disability insurance policies life assurance companies trauma insurance policies