Login | Create Account

Thursday, 19 March 2009

Many current bookkeepers and business owners do not realise the intricacies involved in paying insurance through a finance premium. Most business will have multiple insurances and then these are all grouped together onto a 'statement' and paid for you by a finance company. The business then pays 'usually' ten monthly repayments to the finance company throughout the year.

 

Too many times we find that the financial advisor will not leave the full information with the business owner. The summary or statement is just not enough as a bookkeeper always needs to site the orignial insurance document to ascertain how much GST is claimable on the actual 'Tax Invoice' for the insurance. All insurances include a stamp duty component so GST can NOT be claimed on the full amount.

 

I have also seen many bookkeepers enter all of the insurance bills as purchases and make regular monthly payments off the bills through 'Pay Bills' in MYOB. While this is sort of okay it leaves the business owner without the full GST claim that they are entitled to during BAS time if they are reporting on a CASH basis for the BAS. The ATO sees the funding arrangement as a payment in full in regars to the insurance so you are entitled to claim the full Input Taxed Credits upon settlement of the finance arrangement.