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Tax-free insurance policy bonuses

After a taxpayer has held a life insurance policy for ten years or longer, the reversionary bonuses received on that policy become tax-free.

Life insurance policies are issued by life insurance companies and friendly societies.

A reversionary bonus is profit earned annually on traditional life contracts on top of the sum insured that is added to the amount of an insurance policy payable at the maturation of the policy or the death of the person insured.

For taxpayers with policies that are less than ten years old, stipulated amounts are included in that taxpayer’s assessable income and a tax offset is available.

A bonus is not considered to be assessable income if it is received:


Posted on 12 April '16 by , under Tax.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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