Good news! When you own your own small business and you have some types of insurance in place for assets in that small business, you may be able to claim some GST credits. Let’s investigate.
So, what’s the deal?
Basically, if you own a small business and you are registered for GST, you may not have to pay GST on insurance premiums if the insurance has been purchased to cover an asset that is either used entirely or in part for business purposes.
What if I use the asset for private and business use?
If the asset for which you have purchased insurance is used for both private and business purposes, then you are only exempt from paying GST for the percentage of the premium that relates to business use.
For example, if you are insuring a car that is used 25% of the time for personal tasks and 75% of the time for business tasks, then you can only claim GST on 75% of the insurance premium.
For what types of insurance am I not able to claim the GST component?
You cannot claim the GST on insurance if the insurance policy was purchased to cover any of the following:
- Residential properties
- Input-taxed/financial supplies — things like credit or loans