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 78 - Insurance  

Subdivision 78-B - Insured entities etc.  

78-50   Settlements of insurance claims give rise to taxable supplies if entitlement to input tax credits is not disclosed  

(1)    
However, the payment or supply is treated as * consideration for a supply made by an entity if:

(a) the entity paid all or a part of the premium, for the * insurance policy , relating to the period during which the event giving rise to the claim happened; and

(b) the entity, or the * representative member of the * GST group of which the entity is a * member , was entitled to an input tax credit for the premium it paid; and

(c) the entity:

(i) did not, at or before the time a claim was first made under the insurance policy since the last payment of a premium, inform the insurer of the entitlement to an input tax credit for the premium it paid; or

(ii) in informing the insurer of the entitlement at or before that time, understated its extent; and

(d) the insurance policy was not issued under a * compulsory third party scheme .

It does not matter whether that entity is the entity insured, or whether the payment or supply is made to that entity or any other entity.

(2)    
The extent to which the payment or supply is treated as * consideration is the extent of the entitlement, or the extent to which the entitlement was understated, as the case requires.

(2A)    

In working out, for the purposes of subparagraph (1)(c)(ii) or subsection (2), whether an entitlement to an input tax credit has been understated, or the extent of the understatement, disregard sections 131-40 and 131-50 (which are about amounts of input tax credits under the annual apportionment rules).

(3)    
The supply made by the entity is a taxable supply whether or not the entity is * registered , or * required to be registered , at the time of the settlement or at the time of the payment or supply by the insurer.

Note:

Subdivision 78-D deals with how GST applies to the taxable supply if the insured entity is not registered, or required to be registered.

(4)    

This section has effect despite section 9-5 (which is about what are taxable supplies) and section 9-17 (which is about consideration).