Insurers guide to the business activity statement instructions

Life insurance

The insured purchased a life insurance policy from a life company at a cost of $635. The policy has a face value of $500 000. The policy premium consisted of:

Base premium	$620
Stamp duty on policy	$15
Total cost of policy	$635

The insured dies and the insurer pays out the $500,000 to the insured's estate.

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	$620	G1	Payment for a sale made in the course of the insurance business. Nothing is shown at label 1A as the sale is for an input taxed policy.
Stamp duty on policy ($15)	Nil	Not applicable	Stamp duty on insurance is not included on the BAS.
Payment to trustee ($500,000)	Nil	Not applicable	A decreasing adjustment does not apply to this transaction.

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

Sections within Purchase of input taxed insurance policy and cash settlement to the insured

• Life insurance
• Insured making mixed supplies