A New Tax System (Goods and Services Tax) Act 1999

Chapter 4 - The special rules  

Part 4-2 - Special rules mainly about supplies and acquisitions  

Note:

The special rules in this Part mainly modify the operation of Part 2-2 , but they may affect other Parts of Chapter 2 in minor ways.

Division 79 - Compulsory third party schemes  

Subdivision 79-A - Modified application of Division 78 to certain compulsory third party scheme payments and supplies under insurance policies  

79-5   Application of sections 78-10 and 78-15 (about decreasing adjustments) where premium selection test is satisfied  

(1)    
This section applies to a payment or supply if:

(a) it is a payment or supply made under a * compulsory third party scheme ; and

(b) the payment or supply is made in settlement of a claim under an * insurance policy ; and

(c) the * premium selection test is satisfied ; and

(d) the payment or supply is not a payment or supply to which section 79-15 (about sole operator elections) applies.

Premium selection test

(2)    
The premium selection test is satisfied if the amount of the premium or premiums for the policy resulted from:

(a) an * operator of the * compulsory third party scheme offering a number of different premium amounts to the entity liable to pay the premium or premiums; and

(b) that entity selecting a premium amount:

(i) that was offered on the basis that there would be an entitlement to an input tax credit for some or all of the amount; or

(ii) that was offered on the basis that there would be no entitlement to an input tax credit for any of the amount.

Input tax credit entitlement

(3)    
If subparagraph (2)(b)(i) applies, then, for the purposes of sections 78-10 and 78-15 :

(a) there is taken to be an entitlement to an input tax credit for the premium paid in relation to the period during which the event giving rise to the claim happened; and

(b) if the supply of the insurance policy was solely or partly a * taxable supply - the amount of the input tax credit is taken to equal the GST payable by the * operator for the taxable supply.

No input tax credit entitlement

(4)    
If subparagraph (2)(b)(ii) applies, then, for the purposes of sections 78-10 and 78-15 , there is taken to be no entitlement to an input tax credit for the premium paid in relation to the period during which the event giving rise to the claim happened.