Taxpayer required to pay GST on insurance sum

Mainzeal [MZ} received funds from an insurer [QBE] for damage caused by four of MZ’s directors. The CIR considered the payment was subject to GST under s 5(13) GSTA because it was paid in relation “to a loss incurred in the course or furtherance of [MZ’s] taxable activity”. MZ argued it was not because the payment was not received “under a contract of insurance”.

The High Court considered the legislative history of s 5(13) GSTA to conclude MZ did receive the payment in relation “to a loss incurred in the course or furtherance of [MZ’s] taxable activity” and that it was subject to GST.