Can salary continuance insurance premiums be deducted from my taxable income?

Yes, the Australian Taxation Office allows a deduction for premiums paid for income protection insurance, including salary continuance cover, provided the policy replaces salary or wages. Premiums for personal injury or capital payments are not deductible. The deduction is claimed in the year the premium is paid.

Does salary continuance insurance affect my minimum wage entitlements?

No. Salary continuance insurance is a separate product that pays you if you cannot work due to illness or injury. It does not change the minimum wage your employer must pay you for work performed. Your employer must still pay at least the national minimum wage (or the applicable award or agreement rate) for all hours worked.

If I am covered by an award, does my employer have to pay me more than the national minimum wage?

Yes, in most cases. Modern awards set minimum pay rates that are often higher than the national minimum wage. For example, the lowest ongoing classification under an award cannot be less than $26.44 per hour from 1 July 2026, but many awards have higher rates for specific roles. Check your award using the Fair Work Ombudsman's Pay and Conditions Tool or the Fair Work Commission's Modern Awards Pay Database.

Salary Continuance Insurance and Minimum Wage Floors: Award Coverage vs Award-Free Rates

The national minimum wage is $26.44 per hour as of 1 July 2026, but award-covered employees may have higher minimum rates.

Salary Continuance Insurance and Your Pay Floor

Salary continuance insurance is a type of income protection policy that replaces a portion of your salary if you are unable to work due to illness or injury. While this insurance helps protect your income, it does not change the minimum wage your employer must pay you for the work you actually perform. Understanding how the minimum wage system works – whether you are covered by an award or award-free – is essential to ensuring you are paid correctly.

The National Minimum Wage for Award-Free Employees

If you are not covered by a modern award or an enterprise agreement, the national minimum wage applies. As of 1 July 2026, the Fair Work Commission set this rate at $26.44 per hour, or $1,004.90 per week for a 38-hour week. Casual employees receive a 25% loading, making the minimum $33.05 per hour. These rates are before tax and do not include superannuation, which your employer must pay on top at 12% of your ordinary time earnings.

However, not all employees must receive the full adult rate. Junior employees, apprentices, trainees, and workers with a disability may be paid less under specific rules. For award-free juniors, the percentages range from 36.8% for under 16 to 97.7% for 20-year-olds. Introductory rates under some awards can also be lower for the first six months, but they cannot fall below $25.74 per hour or $978.10 per week.

Award Coverage and Higher Minimum Rates

Most employees in Australia are covered by a modern award that applies to their industry or occupation. Awards set minimum pay rates that are often higher than the national minimum wage. The Fair Work Commission publishes a Modern Awards Pay Database that shows the exact minimum rates, allowances, and penalty rates for each award. For example, after the 2026 Annual Wage Review, award minimum wages rose by 4.75%, but the lowest ongoing classification in any award cannot be less than the national minimum wage.

If you are covered by an award, your employer must pay you at least the rate specified for your classification. That rate may include loadings, penalty rates, or allowances that are not part of the national minimum wage. Always check your award using the Which minimum wage applies guide or the Rate tables on this site.

Salary Continuance Insurance and Tax

The Australian Taxation Office allows you to claim a deduction for premiums paid for salary continuance insurance, as long as the policy provides income protection (replacing salary or wages) rather than a capital sum for injury. For example, if you pay $250 per month for a policy that includes $175 for income protection and $75 for personal injury cover, you can only deduct the $175 portion. If you later receive payments under the policy, those payments are assessable income and must be included in your tax return.

How Superannuation Fits In

Your employer must pay superannuation guarantee contributions of 12% on your ordinary time earnings, including any award or agreement loadings. This is on top of your minimum wage. Salary continuance insurance premiums paid through your super fund are not deductible because they are deducted from contributions. If you arrange your own policy outside super, the premiums are deductible as explained above.

Award-Free vs Award Coverage: Which Applies to You?

Most private-sector employees are in the national system and covered by a modern award unless their role is specifically excluded. Some state public sector and local government employees, and some Western Australian sole traders and partnerships, may be covered by state awards instead. If you are award-free and agreement-free, the national minimum wage is your floor. If you are covered by an award, that award sets your minimum – and it is usually higher.

To find out which award applies to you, use the Fair Work Ombudsman's online tools. The Guides on this site can help you understand the difference between award rates and the national minimum.

Key Takeaways

Salary continuance insurance premiums are tax-deductible if the policy replaces income.
The national minimum wage for award-free adults is $26.44 per hour from 1 July 2026.
Award-covered employees generally have higher minimum rates.
Superannuation is paid on top of your minimum wage at 12%.
Always check your award or agreement, as it may require a higher rate than the national minimum.

For more detail on how these figures are calculated, see How the figures work.