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

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

    The insured is a non-resident and purchases a building and contents policy for $1,697 from a general insurer located in Australia. The insured's building and contents are located overseas. The policy premium consisted of:

    Base premium

    $1,682

    Stamp duty on policy

    $15

    Total cost of policy

    $1,697

    The insured has notified the insurer that they do not have any entitlement to input tax credits on the policy premium. There is a $200 excess on this insurance policy.

    The building is damaged and the insurer is advised that the cost to repair the building is $3,500. The insurer pays the insured $3,300 for the repairs and the insured pays the $200 excess directly to the repairer.

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

    Description of payment

    Amount shown on activity statement

    Activity statement label

    Reason

    Base premium.

    $1,682

    G1

    Payment for a sale made in the course of the insurance business.

    GST-free base premium.

    $1,682

    G3

    This is a GST-free supply made in the course of the insurance business.

    Stamp duty on policy ($15).

    Nil

    Not applicable

    Stamp duty on insurance is not included on the activity statement.

    Excess payment from insured ($200).

    Nil

    Not applicable

    Payment is not for a supply, therefore it is not included on the activity statement.

    Payment to insured ($3,300).

    Nil

    Not applicable

    Not an acquisition. A decreasing adjustment does not apply to this transaction as the supply of the policy was GST-free.

    Attention

    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 G3.

    End of attention
      Last modified: 30 May 2014QC 16293