Are you leaving money on the table by not claiming all your premium deductions at tax time?
If you’re a landscaper in Australia, you’re no stranger to the costs of running your business, especially when it comes to tools, vehicle maintenance and insurance.
All of those things can – and do – add up quickly.
That being said, did you know your public liability insurance premiums might qualify as a tax deduction?
Yep, that’s right. Let’s break down what you need to know to maximise your tax savings and avoid missing out by claiming that premium.
Can public liability Insurance be claimed on tax?
Yes, it can.
According to the Australian Tax Office (ATO), any sort of expense directly related to generating your income can be deducted from your taxable income. Public liability insurance is technically considered a business expense because it protects you financially if a claim is made against your work.
The premium you pay for public liability insurance isn’t just protection for your business, but an opportunity to also reduce your taxable income.
How do you claim public liability insurance as a deduction?
Claiming your public liability insurance premiums isn’t complicated, but you need to get it right. Here’s a step-by-step guide to help:
1. Keep detailed records: ensure you have receipts, invoices, and policy documents for your public liability insurance premiums. These will serve as evidence in case the ATO requires proof of your claim.
2. Categorise expenses properly: include your insurance premiums under ‘Other Operating Expenses’ or the relevant category on your business tax return.
3. Divide up personal use: if your policy covers both personal and business use, you’ll need to separate the expense and claim only the business-related portion.
4. Use accounting software: most accounting software can help you track deductible expenses and generate reports for your tax return.
5. Consult a tax professional: for added assurance, seek the advice of a tax professional to ensure your claims are accurate and compliant with ATO guidelines.
Important insight
According to the ATO, small businesses, including landscapers, often miss out on claiming thousands of dollars in deductions each year due to a lack of awareness about deductible expenses like insurance premiums.
What about other types of insurance?
Not all insurance premiums can be claimed as business deductions. For example:
1. Life insurance: premiums for personal life insurance policies are not tax deductible, even if you are self-employed.
2. Health insurance: health insurance premiums are generally considered personal expenses and cannot be deducted.
3. Income protection insurance: while deductible in some cases, this often depends on whether the policy is tied to your business activities or personal income.
But here’s the good news: in addition to public liability insurance, several other types of insurance premiums are tax deductible for landscapers, such as professional indemnity insurance, business interruption insurance, and commercial vehicle insurance.
What happens if you don’t claim?
By not claiming, you’re essentially giving away free money to the tax office. Even a small deduction, like your public liability insurance premium, can add up over time. Multiply that by a few years and the savings become significant.
The bottom line
Public liability insurance goes beyond just meeting your legal obligations—it’s a proactive investment in the resilience and credibility of your landscaping business. By understanding and claiming all eligible tax deductions, including your insurance premiums, you not only protect your operations, but also position your business for sustainable growth.
So, take the time to review your financial strategies and make every dollar work smarter for you.
For more information on broker services, or for expert insurance advice, contact Midland Insurance Brokers. You can find the phone number of your nearest office at midlandinsurance.com.au, or just jump in and dial 1300 306 571. If you’d rather email, send to landscape@midlandinsurance.com.au.