Insurers guide to the business activity statement instructions

Insured not registered for GST - health insurance

The insured, who is not registered for GST, purchases health insurance from a health fund and pays an annual contribution of $1,080.

The insured requires a prosthesis costing $1,500. The prosthesis is GST-free. Under the terms of the policy, the insurer will pay the insured $1,275 (that is, 85% of the cost).

The insurer would treat this situation on their business activity statement as follows.

Description of payment	Amount shown on BAS	BAS label	Reason
Base premium.	$1,080	G1	Payment for a sale made in the course of the insurance business.
GST-free base premium.	$1,080	G3	This is a GST-free supply made in the course of the insurance business.
Payment to insured ($1,275)	Nil	Not applicable	Not an acquisition. A decreasing adjustment does not apply to this transaction as the sale of the policy was GST-free.

There is no section 78-18 increasing adjustment applicable to the excess payment from the insured regarding the settlement. The insurer has not made creditable acquisitions directly for the purposes of settling the claim.

For accuracy and statistical purposes it is necessary to show the amounts at G1 and G4.

Sections within Purchase of GST-free insurance policy and cash settlement to the insured

• Insured not registered for GST - health insurance
• Insured registered for GST - health insurance
• Insured not registered for GST - the policy is directly connected with goods or real property located offshore