GST issues registers
Insurance industry partnership32 Settling a claim and repairs
Issue
Some insurers are paying ten-elevenths of the total repair costs to the repairer and instructing the registered and fully creditable insured/injured party to pay the other one-eleventh to repairer and then claim that amount from ATO as an input tax credit.
For source of ATO view, refer to paragraphs 65 to 68 of GSTR 2006/10 - Goods and services tax: insurance settlements and entitlement to input tax credits
ATO view
Only if the insured/injured party pays the full repair costs will they be entitled to an input tax credit of one-eleventh of the total repair costs. The insurer has to be paying the repairer on behalf of the insured/injured party. The ten-elevenths coming from the insurer has to actually be the insured's/injured party's money or digital currency. Otherwise, the insured/injured party is only entitled to one-eleventh of the consideration they provide, ie, one-eleventh of one-eleventh of the total repair bill.
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