GST issues registers

Insurance industry partnership

26 Non-notification

Issue

Some workers' compensation authorities have decided that if they do not receive a notification of the extent to which there is an entitlement to input tax credits on the premium/levy/contribution, they will assume that the entitlement is 100%. Most employers will be entitled to 100% input tax credits (ITC).

The result of this assumption is that the insurer will not claim a decreasing adjustment on the claim. If the assumption is incorrect, such as the employer concerned was entitled to less than 100% input tax credits, the insurer would not have claimed a decreasing adjustment to which it was entitled. Is this acceptable to the ATO?

Non-interpretative

ATO view

This is acceptable to the ATO provided the insurer:

•

requests the input tax credit entitlement information from the entity (for example, as a question on the claim form)

•

in the event the entity fails to provide that information, the insurer has made reasonable attempts to obtain information as to the entity's input tax credit entitlement.

Workers' compensation insurance covers an employer against liability for injury, death or disease suffered by an employee as a result of their employment. It is therefore reasonable to assume that given the nature of worker's compensation insurance, it is obtained for a creditable purpose. However, given the nature of other types of insurance, the same assumption could not be made by the insurer in respect of those other types of insurance.

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