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Te rīanga tangata kaimahi Employee life insurance

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Policies payable on maturity or surrender

If you pay the whole premium of a policy payable on maturity or surrender, and the employee will receive the proceeds, the premiums become employee income. You should include the gross premium in employee wages for the period the premium was paid.

If you pay the whole premium of the policy and the proceeds are payable to you, the premiums are not treated as salary or wages.

Policies payable on sickness, accident or death

Insurance policies payable on sickness, accident or death have different tax implications.

  • If the policy is for life insurance, personal sickness or accident and it is taken out by the employer, the premium is liable for fringe benefit tax.
  • If the policy is for life insurance, personal sickness or accident and it is taken out by the employee, the premium is treated as normal salary and wages and is liable for PAYE.
  • If the policy is a group insurance policy (life or medical) and it is taken out by the employer, the premium is liable for fringe benefit tax.