GST issues registers

Insurance industry partnership

30 Partners and income protection insurance

Issue

If a partner of a partnership acquires income protection insurance, is the partnership entitled to an input tax credit on the acquisition?

Non-interpretative - straight application of the law.

ATO view

Section 184-5 of the GST Act - supplies etc. by partnerships and other unincorporated bodies - provides as follows.

(1)

For the avoidance of doubt, a supply, acquisition or importation made by or on behalf of a partner of a partnership in his or her capacity as a partner:

(a)

is taken to be a supply, acquisition or importation made by the partnership; and

(b)

is not taken to be a supply, acquisition or importation made by that partner or any other partner of the partnership.'

Whether or not a partnership is entitled to an input tax credit in respect of an income protection policy taken out by a partner in the partner's own name will depend on the policy. That is, is the income protection, although in the name of the partner, to protect the income of the partnership or that of the partner as an individual.

If it is the latter, then the partnership is not entitled to an input tax credit as the partner will not have acquired the insurance on behalf of the partnership. Also, the requirements under Division 11 must be met in order for the partnership to claim an input tax credit.

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