Co-insurance is the sharing of risk among insurers. The goods and services tax (GST) treatment of co-insurance arrangements depends on the nature of the arrangement between the co-insurers in each case.
This information is for insurers. It describes the GST treatment of co-insurance under three possible arrangements:
- Agency agreement – where an agency relationship exists, Subdivision 153A of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) would apply.
- Subdivision 153-B agreement – where the co-insurance group has chosen to enter into a Subdivision 153-B agreement, the provisions of that Subdivision would apply.
- Joint venture agreement – where the co-insurance group has formed a GST joint venture, Division 51 would apply.
These arrangements do not cover all the possibilities of co-insurance arrangements. You should seek advice based on your particular co-insurance arrangement. In the case of Subdivision 153-B agreements and GST joint venture agreements it is up to the co-insurers to choose whether they want these arrangements to apply.
There are various conditions outlined in the relevant parts of the GST Act that have to be met before entities can choose to apply those arrangements. These requirements are not discussed below.