At claim time in General Insurance something that can be confusing for the claimant is the handling of GST. When a claim is put through with an insurer the claimant seeks to be reimbursed for the loss of the value of the goods including GST, however the GST component of the claim is treated differently depending on the type of claimant.

Does this sound confusing? Maybe so, but it’s not as bad as it sounds.

The claimant is either a taxable entity, a business registered for GST, or not. If the claimant is a business registered for GST the claim is paid by the Insurer excluding GST. The business can then claim the GST component of the claim as an Income Tax Credit (ITC) on their next tax return from the Australian Tax Office (ATO).

If the claimant is not taxable entity, and therefore considered to be a direct consumer, then the GST component of the claim is paid directly by the Insurer as part of the claim to the consumer. Therefore, if an Insurer or Broker asks you if are eligible for Income Tax Credits this is the basis of that question.

Below is a flowchart showing the process and handling of the GST component for a GST registered business.

Does Mitchell Insurance Management wish for you to have Claims? Of course we don’t, as it means you’ve experienced an unfortunate incident and loss. However we do want for all of our clients to understand this critical component in the process of how your insurance program is managed.

If you would like to talk through your insurance and how it will work together in relation to your business activities, feel free to call Mitchell Insurance Management on 02 6113 0478 or contact us. We would enjoy the opportunity to talk through your potential business risks and propose appropriate solutions that fit and could support your business going forth.

The information contained in this blog provides only a general overview of subjects covered. It is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult Mitchell Insurance Management regarding specific coverage issues. All insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies. Mitchell Insurance Management cannot provide any assurance that insurance can be obtained for any particular client or for any particular risk.