If you are registered for GST and you take out general insurance for business purposes, you will normally be entitled to claim input tax credits for GST included in your insurance premiums. (You will not be entitled to claim the input tax credits relating to input taxed supplies made by your business. Input taxed supplies include many financial services, such as the provision of loans or credit.)

You can claim the input tax credits regardless of whether (under the old rules) you have already notified the Commissioner of your intention to do so. However, you must inform your insurer of the extent to which you can claim input tax credits on your premium.

As long as you have given your insurer this information you will not be required to remit any GST to the Australian Tax Office (ATO) when you receive a settlement. However, you will still be able to claim input tax credits to cover GST costs such as those included in the price of replacement or repairs for your goods.

Even though the insurance settlement will not include GST, the policy normally states that the insured value must include the GST. For example, the insured value of $1,100 means you will only receive $1000.

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