Question

1) Find from following each situation whether it is Taxable supply or GST Free supply or Input taxed supply? Explain your answer with relevant section number and how much GST, if any, is included in the following situation.

a) A residential course, offered by a regional University, leading to a Graduate Diploma in Australian Law. The course cost is $35,000 comprising $25,000 for course fees and $ 10,000 for accommodation and meals.

b) Life insurance policy $75,000.

Answer 1

Residential Course of Graduate Diploma-

Educational services are exempt of GST but since fees of $35000 can be classified as fee course of $25000 and $10,000 as accommodation and meal expenses .Accomodation and meal expenses will be considered as a taxable supply.

Life Insurance Policy of $75000

GST (Goods and Service Tax) came into effect on 1 july 2017. It is an indirect tax levied on supply of goods and services which is charged at the point of consumption of goods/services. GST is charged on the premium amount of the life insurance policy however the rate of GST depends on the type of product a person invests in . Generally 18 % of GST is charged on the basic premium and is mentioned separately on the policy documents that GST would be charged in addition to the premium.

In case of traditional endowment insurance , 4.5% and 2.25 % GST is charged on the premiums of first year and second year respectively .

Also ,GST paid on life insurance can be claimed as a deduction under section 80C of Income tax Act, 1961 which clearly states that any amount paid or deposited towards keeping LIC policy active can be claimed as a deduction which leads the to reduced tax liability.