GST liability on salvage value: insurers not liable when salvage remains with insured; liable when insurer acquires and disposes salvage. Where an insurance contract deducts salvage/wreck value from the claim, the salvage remains the insured's property and that deduction is not consideration for a supply by the insurer, so the insurer has no GST liability on the earmarked salvage. Conversely, if the insurer settles the full insured amount without deducting salvage, ownership of the salvage vests in the insurer and any subsequent disposal by the insurer is a taxable supply subject to GST.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
GST liability on salvage value: insurers not liable when salvage remains with insured; liable when insurer acquires and disposes salvage.
Where an insurance contract deducts salvage/wreck value from the claim, the salvage remains the insured's property and that deduction is not consideration for a supply by the insurer, so the insurer has no GST liability on the earmarked salvage. Conversely, if the insurer settles the full insured amount without deducting salvage, ownership of the salvage vests in the insurer and any subsequent disposal by the insurer is a taxable supply subject to GST.
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