All tradies love a good tax deduction, and why not? No one wants to pay more tax than they have to.

One area in which tax deductions are fairly easy to obtain for tradesmen is their insurance.

We’ve put together a list of the various insurance types used by tradies, and how you can obtain a deduction on each of them.

Tax Advice Warning

Before we get stuck into it, we need to point out that we are not registered tax accountants or qualified to provide professional taxation advice.

The information we have provided in this article is for information purposes only, and you should speak with your accountant rather than basing your decisions solely on this article.

Whilst keeping all that in mind, tax deductions are fairly straightforward when it comes to business insurance. The information should be correct but we still recommend checking with your accountant.

Insurance Types

We’ll now run through the major forms of tradesman insurance and their tax status.

Public Liability Insurance

Most self-employed tradies and subbies will have public liability cover, and the good news is that the premiums are 100% tax deductible.

Your insurance broker (or insurance company if you go direct) will provide you with a tax invoice each year, and you just need to keep this for your records.

Tool Insurance

Tool insurance is also 100% tax deductible provided that the insurance is for your business.

RooferIf you have tool insurance but are not operating as a business, say if you are an apprentice or employee on wages, you should check with your accountant before claiming a deduction.

Income Protection

Although income protection is always taken out in your personal name rather than through your business, the premiums are still tax deductible.

This is regardless of whether you a subcontractor, an employee or run your own company.

It’s important to remember that this deduction will generally be on your personal tax return rather than your business return.

Life & TPD Insurance

The tax deductibility of life and TPD insurance for tradespeople will depend on how you’ve taken out the cover.

If you have taken out the cover in your own name, then unfortunately the premiums will not be tax deductible.

If you have taken out the insurance via your super fund then the premiums can have the effect of being tax deductible, due to the tax treatment of your super contributions.

This is an area that is best discussed with your accountant or financial adviser, but in any case it’s not something that you have to worry about on your own tax return as it will be managed by your super fund.

Trauma Insurance

Unfortunately trauma insurance is never tax deductible for a tradie, or for any other occupation for that matter.

Seeking Professional Advice

Although insurance tax deductions for tradesmen are fairly straightforward, it always pays to seek professional advice first.

When getting your tax done next, simply let you accountant known which types of trade insurance you have in place and they will be able to confirm which ones are eligible for a deduction.

If you do your own tax, we strongly recommend that you seek expert advice before following the information in this guide. It is basic information only and does not take into account your personal circumstances.

So if you’ve been looking for more reasons to take out insurance for your trade business, now you have another one!


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