Are you registered for GST (Goods and Services Tax)? If your answer’s yes, you may be able to claim GST credits for your insurance premium.
Discover the GST tax credit insurance changes you should lookout for this year.
How to claim a GST tax credit insurance?
You have one of these two possibilities:
- You can tell your insurer how much of the insurance premium is for business purposes. The insurer can then avoid charging you GST.
- You can pay the GST component on your insurance and then claim a refund for it from the Australian Taxation Office (ATO).
Are you eligible for a GST credit claim? You can claim it through your activity statement, BUT you can only do it for the part of the insurance relating to your business.
You can claim it through your activity statement, BUT you can only do it for the part of the insurance relating to your business.
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Here are some exceptions you should know about
Usually, the goods and services tax claim is charged on most insurance policies, except two:
- life insurance, since they’re input taxed
- all health insurance policies, because they’re GST-free
You can only claim a GST tax credit insurance for those sections of your insurance relating to your business. Therefore, you can’t claim GST credit for the parts related to input-taxed sales you make or things you use for private or domestic purposes.
Does it make more sense now?
A few more items that aren’t eligible for GST credit include:
- compulsory third party motor vehicle insurance premiums where the cover started before 1 July 2003
- any excess payments you give to your insurer
You don’t have to report GST amounts on any of the following:
- Money, digital currency or goods you receive from your insurer to settle your claim under an insurance policy – provided you told your insurer the amount of GST you can claim on the policy premium, before or when you made a claim
- Settlement of your claim against another party where you are not the insured party and the insurer pays the settlement amount directly to you
- Settlement of your claim against another party, where the insured receives the amount as settlement from their insurer and then provides it to you
You might also be interested in: The ABC’s of Buying Life Insurance
Are you ready to claim GST credit for your insurance policy?
I can help you understand what your tax obligations are and which deductions you can be eligible for. Let’s go through this process together. Get in touch below.
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