Insurance premiums are treated differently for taxation purposes depending on whether a motor vehicle owner is registered for Goods and Services Tax (GST) and has an Input Tax Credit (ITC) entitlement.

Premiums are higher for motor vehicle owners who are entitled to an ITC, but they can offset the difference in the premium by claiming an ITC for the GST portion of their premium.

If you are registered for GST purposes and able to claim the ITC on the premium, you must answer “yes” to the question “Is anyone entitled to claim an input tax credit on this vehicle?” when registering your vehicle. This is the case even you don’t intend to claim the ITC.

If you are not sure about your GST and/or ITC entitlement status, you should check with your accountant, financial advisor or tax agent. See more information about claiming tax credits from the Australian Taxation Office.