Institute of Certified Bookkeepers
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Premium Funding - GST treatment

  • Member in Practice
  • Practice Certificate
  • 14 posts
  • # 117985

Hi,

My client use Premium Funding (fiance for insurance premium) to pay for business insurance. The client is registered as GST Cash basis. I'd like to know when is the GST credit claimed, is it the whole amount upfront or by payment instalment?

Thank you.

Mattie

  • Fellow in Practice
  • Practice Certificate
  • 266 posts
  • # 118005

Hi Mattie

 

If they are cash based then the whole amount can be claimed as an expense and for GST up front.  The payments then from the bank will just offset a loan account that you would do to set it all up with the expense of insurance going to an expense account inclusive of GST and the other side being the loan account.  You could also pay it initially but then setup as prepayments if you wish to show the expense in each month.  Icb Have resources to help with this.

https://www.icb.org.au/Resources/Bookkeeping/Prepayments

 

https://www.icb.org.au/Resources/Bookkeeping/Premium-Funding

 

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