Insurers guide to the business activity statement instructions

Insured entitled to full input tax credit - no excess

Reinstatement - taxable supply

The insured purchased a comprehensive motor vehicle insurance policy from a motor vehicle insurer for $1,330. The policy premium consisted of:

Base premium	$1,200
GST on policy	$120
Stamp duty on policy	$10
Total cost of policy	$1,330

The insured is registered for GST and has notified the insurer of their entitlement to a full input tax credit on the policy premium. There is no excess on this policy.

The motor vehicle is damaged in an accident and taken to a panel beater for repairs. The insurer is advised that the cost to repair the vehicle is $5,500 (GST-inclusive). The insurer contracts with the panel beater to repair the vehicle and pays $5,500 for the repairs.

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 inclusive of GST.	$1,320	G1	Payment for a sale made in the course of the insurance business.
GST on policy.	$120	1A	GST in respect of the sale made in the course of the insurance business.
Stamp duty on policy ($10).	Nil	Not applicable	Stamp duty on insurance policies is not included on the BAS.
Payment to repairer.	$5,500	G11	Acquisition is a non-capital purchase.
ITC for repairer payment.	$500	1B	GST on purchase.

Reinstatement - GST-free supply (goods)

The insured runs a seafood café and purchased contents insurance from a general insurer for $2,062. The policy premium consisted of:

Base premium	$1,850
GST on policy	$185
Stamp duty on policy	$27
Total cost of policy	$2,062

The insured is registered for GST and has notified the insurer of their entitlement to a full input tax credit on the policy premium. There is no excess on this policy.

The insured's café was broken into and some of the seafood stolen. The insurer assesses the loss of the seafood as being $1,540 (GST-free). The insurer contracts with a seafood wholesaler to replace the seafood stock and pays the supplier $1,540.

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 inclusive of GST.	$2,035	G1	Payment for a sale made in the course of the insurance business.
GST on policy.	$185	1A	GST in respect of the sale made in the course of the insurance business.
Stamp duty on policy ($27).	Nil	Not applicable	Stamp duty on insurance is not included on the BAS.
Payment to supplier for GST-free goods ($1,540).	$1,540	G11	The acquisition is a non-capital purchase. For reporting purposes, GST-free purchases are included at label G11. As there is no GST associated with this purchase, it will not form part of the label 1B amount. A decreasing adjustment does not apply to this transaction.

Reinstatement - GST-free supply (services)

The insured purchased personal accident insurance from a workers' compensation insurer for $734. The policy premium consisted of:

Base premium	$660
GST on policy	$66
Stamp duty on policy	$8
Total cost of policy	$734

The insured is registered for GST and has notified the insurer of their entitlement to a full input tax credit on the policy premium. There is no excess on this policy.

An employee of the insured has an accident at work and receives treatment at the local hospital. The insurer contracts with a rehabilitation hospital to supply GST-free rehabilitation services to the employee. Whilst the supply to the injured worker is a supply of a GST-free health service, the supply to the insurer under contract is not. It is a taxable supply. The insurer pays the hospital costs of $3,850 and will be entitled to an input tax credit of $350.

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 inclusive of GST.	$726	G1	Payment for a sale made in the course of the insurance business.
GST on policy.	$66	1A	GST in respect of the sale made in the course of the insurance business.
Stamp duty on policy ($8).	Nil	Not applicable	Stamp duty on insurance is not included on the BAS.
Payment to hospital taxable supplies.	$3,850	G11	Payment for a creditable acquisition. A decreasing adjustment does not apply to this transaction.
ITC for hospital payment.	$350	1B	GST on purchase.

Sections within Purchase of insurance policy and reinstatement to the insured

• Insured entitled to full input tax credit - no excess
• Insured entitled to full input tax credit - excess paid directly to insurer
• Insured entitled to full input tax credit - excess paid to supplier
• Insured entitled to partial input tax credit - no excess
• Insured entitled to partial input tax credit - excess paid to insurer
• Insured entitled to partial input tax credit - excess paid to third party
• Insured not entitled to input tax credit - no excess
• Insured not entitled to input tax credit - excess paid to insurer
• Insured not entitled to input tax credit - excess paid to supplier