Are you one of the many people who run a business and holds insurances of one form or another? More than likely this statement will apply to you. There are a few things to be aware of when it comes to insurances and subsequently GST on the insurance.
General rules surrounding the application of GST on insurance proceeds received is that settlement of claims are not taxable supplies and therefore no GST will need to be remitted to the Tax Office. However if you do not disclose to the insurance company the extent of your entitlement to Input Tax Credits when lodging your claim, then the proceeds received will include GST, and thus GST may be required to be remitted to the ATO.
In short, it is of vital importance to inform your insurer of the extent to which you are entitled to claim GST on your insurance premiums paid. A quick phone call or email may save a big headache down the track and potentially save you a significant amount of money!
This article was written by Luke Foster, a CA qualified Senior Accountant at our Burleigh Office. Outside of work Luke enjoys the outdoors, classic cars and motorbikes, boxing and fishing.