Business insurance premiums carry 10% GST: general cover like vehicle, property, public liability and professional indemnity is a taxable supply, and a registered business claims the credit on the business-use portion of the premium, except the stamp duty slice, which has no GST in it. Life insurance (input-taxed) and private health insurance (GST-free) carry no GST at all. An insurance settlement carries no GST and doesn't go on your BAS as a sale: provided you told the insurer, when or before making the claim, what percentage of the premium's GST you could claim as a credit. Skip or understate that disclosure and Division 78 of the GST Act can turn up to 1/11 of the payout into GST you owe. The excess carries no GST and generates no credit, whoever you pay it to.
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The premium: what's actually in the price
Insurance splits three ways for GST, and the policy type decides which rail you're on. General insurance (the ute, the shop, tools, public liability, professional indemnity, cyber, marine) is a taxable supply: the insurer charges 10% GST on the premium. Life insurance is a financial supply and therefore input-taxed: no GST in the premium, nothing to claim. Private health insurance is GST-free: same result for you: no GST in, no credit out.
Inside a taxable premium sits one more wrinkle: stamp duty. State insurance duty is added to the premium but carries no GST, so the GST is 10% of the premium less the stamp duty, which is why the GST shown on an insurance tax invoice is usually a little less than one-eleventh of what you paid. Claim what the invoice says, not what the arithmetic tempts you to.
| Policy | GST in the premium | Credit for a registered business |
|---|---|---|
| General insurance: vehicle, property, liability, indemnity | Yes: 10% of the premium less stamp duty | Yes: the business-use portion, per the tax invoice |
| Stamp duty component of any premium | None | Nothing to claim on that slice |
| Life insurance | None: input-taxed financial supply | Nothing to claim |
| Private health insurance | None: GST-free | Nothing to claim |
For the claimable kind, the usual credit rules apply: registered, business purpose, and a tax invoice for premiums over $82.50. Mixed-use assets get the same apportionment as everywhere else in GST: insure a vehicle that's 70% business and you claim 70% of the premium's GST, the logbook split your motor vehicle claims already run on.
The disclosure: one form question that decides your claim's GST
Somewhere on every business insurance application, renewal and claim form is a question that looks administrative and isn't: "Are you registered for GST, and what percentage of the GST on this premium are you entitled to claim as an input tax credit?" The ATO requires you to notify the insurer of that entitlement when, or before, a claim is made, and your answer sets the GST treatment of any money the insurer ever pays you.
Answer it accurately and the settlement is a GST non-event: the payout isn't consideration for any supply, no GST is payable on it, and it doesn't appear on your BAS as a sale. The special machinery of Division 78 of the GST Act instead settles the tax between the insurer and the ATO, out of your sight. The right answer is the truth: 100% for a fully creditable business policy, the business percentage for a mixed-use asset, 0% if you're not registered.
Get it wrong and the payout grows a GST liability
The trap runs one way. Tell the insurer you're not entitled to credits when you are (or understate the percentage) and section 78-50 treats the settlement as consideration for a taxable supply that you made, to the extent of the undisclosed entitlement. One-eleventh of that money is the ATO's, reported on the activity statement for the period the claim was settled. A $50,000 payout to a fully registered business that never disclosed its entitlement can carry a $4,545 GST bill the compensation was never sized for.
It's an easy mistake to make honestly: a business registers for GST mid-policy and never updates the insurer, or the person renewing the policy ticks "not registered" because the question looks like it's about the insurer. The prevention is a ten-second check at every renewal and claim; the cure, if a settled claim is already wrong, is a BAS correction made deliberately rather than an ATO review made to you. And if the disclosure failed because the business should have been registered and wasn't, backdating the registration is usually the first repair.
How the payout is sized: why registered businesses get paid "net of GST"
Insurance pays for the loss you actually suffer, and GST registration changes what that loss is. Say a storm does $22,000 of damage to registered premises: $20,000 of repairs plus $2,000 GST. A fully registered insured wouldn't really lose the $2,000: had they paid the repairer themselves, the GST would come back as a credit. So in practice, per the policy terms and the entitlement you declared, the insurer settles one of two ways:
1. Cash settlement, net of GST. The insurer pays the GST-exclusive $20,000. No GST on the money, nothing on your BAS, and if you then spend it on repairs in your own name, that purchase generates its own credit in the ordinary way, which is what makes you whole.
2. Insurer pays the repairer. The insurer arranges and pays for the repairs, and the GST position on that bill is the insurer's to deal with, not yours: you claim nothing on work you didn't pay for.
An unregistered policyholder genuinely wears the GST on a repair, so they're generally paid the GST-inclusive amount. Either way the settlement follows the entitlement you declared: one more reason the form question above deserves a truthful answer, and one more thing to re-check the day your turnover crosses $75,000 and your entitlement flips from 0% to 100%.
The excess: no GST, no credit, keep it off the BAS
The excess feels like a business cost with GST in it. It isn't. Under the ATO's insurance ruling GSTR 2006/10, an excess you pay to the insurer (or hand straight to the repairer because the insurer directed you to) is not consideration for any supply to you. There's no GST in the payment and no credit to claim, even though the repair invoice it contributes to is full of GST; the insurer accounts for the excess inside its own adjustments. Book the excess as a GST-free outlay and leave it off the BAS credits label entirely: it's a common over-claim the records review catches.
Where registration changes the arithmetic
Premiums are one of the quiet recurring credits a registration unlocks. A trades business carrying vehicle, tools and liability cover can easily pay $5,000–$10,000 a year in premiums; registered, roughly a tenth of that (after the stamp duty carve-out) comes back on the BAS: alongside the ute and the gear. Over the $75,000 threshold registration is mandatory anyway; under it, premium credits join the rent and equipment case for registering voluntarily. When you do register, the same-day job list has three insurance lines on it: tell every insurer your new status and entitlement percentage, start keeping the premium tax invoices, and claim on the timing your accounting method sets.
Quick answers
Is there GST on insurance premiums in Australia?
On most business policies, yes: general insurance such as vehicle, property, public liability and professional indemnity cover is a taxable supply, so the premium includes 10% GST. Two components don't: the stamp duty in the premium carries no GST, and two whole categories of insurance sit outside the 10%: life insurance is input-taxed as a financial supply and private health insurance is GST-free, so neither premium has any GST in it to claim.
Can I claim a GST credit on my business insurance premium?
Yes, if you're registered for GST and the policy covers something used in your business: you claim the GST in the premium to the extent of the business use, the same apportionment you'd apply to a vehicle or phone. Keep the tax invoice for premiums over $82.50, and don't claim on the stamp duty component: it never had GST in it. Nothing is claimable on life or health insurance premiums, which carry no GST at all.
Do I have to pay GST on an insurance settlement or payout?
Not if the paperwork was done right. An insurance settlement isn't treated as payment for a sale, so there's no GST on the money and it doesn't go on your BAS as income, provided you told the insurer, when or before you made the claim, what proportion of the premium's GST you were entitled to claim as a credit. That disclosure is usually a question on the application or claim form. If you didn't make it, or understated it, the GST Act can treat the settlement as payment for a taxable supply you made, and up to 1/11 of the payout becomes GST you owe on your next activity statement.
What do I tell my insurer about GST when I make a claim?
Two things, honestly and on time: whether you're registered for GST, and the percentage of the premium's GST you were entitled to claim as a credit (100% for a fully business-use policy, less where there's private use, 0% if you're not registered). The ATO requires this notification when, or before, a claim is made; most insurers ask on the application form and again on the claim form. It drives everything downstream: whether the settlement carries any GST consequence for you, and whether the insurer pays the claim with or without the GST component.
What happens if I didn't tell my insurer I was registered for GST?
If you were entitled to a GST credit on the premium but didn't disclose it (or understated the percentage) section 78-50 of the GST Act treats the settlement as consideration for a taxable supply by you, in proportion to what went undisclosed. In plain terms: money that should have been GST-free compensation becomes a payment you owe 1/11 of to the ATO, reported when you lodge the activity statement for the period the claim was settled. The fix is prevention (answer the GST questions accurately on every application, renewal and claim form) and if a settled claim has already gone wrong, correct the BAS position rather than leaving it for an ATO review to find.
Why did my insurer pay my claim without the GST?
Because you told them you could claim GST credits. Insurance compensates the actual loss, and for a fully registered business the GST on a repair or replacement isn't a loss: you'd claim it back on your BAS. So on a $22,000 repair, the insurer typically settles cash claims at the GST-exclusive $20,000, or pays the repairer directly and deals with the GST itself. An unregistered policyholder, who genuinely wears the GST, is generally paid the GST-inclusive amount. The exact split follows your policy terms and the credit entitlement you declared, which is why declaring it accurately matters.
Can I claim GST on my insurance excess?
No. Under the ATO's insurance ruling GSTR 2006/10, an excess paid to your insurer (or paid straight to the repairer at the insurer's direction) isn't consideration for any supply to you, so there's no GST in it and no credit to claim, even when the repair bill it contributes to is full of GST. The insurer accounts for the excess within its own settlement adjustments. Keep the excess out of your BAS entirely.
Does registering for GST change what my insurance really costs?
Yes: registration turns the GST in every business premium into a credit, so a $2,200 premium (GST $190 or so after the stamp duty slice is carved out) effectively costs a registered business roughly $2,010 plus the stamp duty, where an unregistered one pays the lot. If your turnover has passed $75,000 you must register anyway; below it, premium credits join rent and equipment in the case for registering voluntarily. Registering is free through the ATO's own online services; our BAS-agent service is $119 + GST if you'd rather have it reviewed and lodged for you, with backdating up to 4 years +$25 + GST to capture credits on premiums already paid.
Related guides: How GST credits work · GST on motor vehicles · GST for tradies and subcontractors · Tax invoice requirements · GST-free vs input-taxed supplies · Fixing BAS mistakes · Crossing the $75,000 threshold
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Reviewed and lodged by Registered BAS Agent 25972850 · $119 + GST, tax deductible · backdating up to 4 years +$25 + GST · free help on 1800 546 526.