GST and attribution of GST by an insurer when insurance premium is paid by way of instalments

Is the entity, an insurer that accounts for goods and services tax (GST) on a non- cash basis, able to attribute GST payable in accordance with Division 156 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when the entity makes a supply of an insurance policy to an insured and the insured pays the insurance premium by way of instalments?

Yes. The entity is able to attribute GST payable in accordance with Division 156 of the GST Act when the entity makes a supply of an insurance policy to an insured and the insured pays the insurance premium by way of instalments. The entity attributes the GST payable on each instalment in the tax period in which each instalment is received.

The entity is an insurer that accounts for GST on a non-cash basis. The entity makes a supply of insurance to an insured. The insurance is supplied for the period specified in the insurance policy.

Under the terms of the insurance policy, the insured can elect to pay the insurance premium either in a lump sum payment or by instalments. The insured elected to pay by way of instalments at set intervals over the period of the insurance.

The entity is registered for GST. The entity's supply of the insurance policy to the insured is a taxable supply under section 9-5 of the GST Act.

Division 156 of the GST Act sets out special rules relating to supplies and acquisitions made on a progressive or periodic basis.

Under subsection 156-5(1) of the GST Act, the GST payable by an entity on a taxable supply that is made: • for a period or on a progressive basis, and • for consideration that is to be provided on a progressive or periodic basis,

is attributable, in accordance with section 29-5 of the GST Act, as if each progressive or periodic component of the supply were a separate supply.

Goods and Services Tax Ruling GSTR 2000/35 provides further explanation of the application of Division 156 of the GST Act. Paragraph 25 of GSTR 2000/35 provides that a supply or acquisition is made 'for a period' when it is made over a specified length of time or for a time with an identifiable end point.

The entity makes a taxable supply of insurance to an insured and, in accordance with the terms of the insurance policy, the insurance is supplied for the period specified in the insurance policy. As such, the entity makes a taxable supply for a period.

Under the terms of the insurance policy, the insured elected to pay by instalments at set intervals over the period of the insurance. As such, the consideration provided for the entity's supply of insurance is to be provided on a progressive or periodic basis.

The entity makes a taxable supply of insurance for a period and for consideration that is to be provided on a progressive or periodic basis. Therefore, the entity is able to attribute GST payable in accordance with Division 156 of the GST Act and attribute the GST payable on each instalment in the tax period in which each instalment is received. Note. In circumstances where the components of a taxable supply, made for a period or on a progressive basis, are not readily identifiable, paragraph 13 of GSTR 2000/35 provides that the components will correspond to the proportion of the total consideration that each separate amount of consideration represents. The GST payable in respect of each separate component will then be attributed in accordance with the application of section 29-5 and section 29-10 of the GST Act.