Increase in GST & how it affects you

As part of the 2010 budget, the Government announced that GST (Goods and Services Tax) would increase from 12.5% to 15% on 1 October 2010. GST is payable on insurance premiums for Trauma, TPD and Income Protection benefits. There is no GST payable on either life insurance premiums or life investment contributions.

Fidelity Life has chosen to apply legislation which allows the maintenance of a 12.5% GST rate for policies in force on 30 September 2010 until the next policy anniversary after that date. Therefore for any benefits that are subject to GST, the premium increase to reflect the new GST rate will be incorporated from the next premium anniversary date after 1 October. The extra GST will be incorporated into the renewal notices for stepped-age adjustments and CPI increments as well as level term policies with benefits subject to GST.

If you are GST-registered and hold your policy for the business purposes, you should note that any GST credit able to be claimed will be at 12.5% for premiums paid up to the anniversary date on benefits subject to GST.

If you take out a new policy and the policy start date is before 1 October 2010, the premium will be calculated using a GST rate of 12.5%. This rate will apply until your next policy renewal date at which point the GST rate of 15% will apply.

If your policy start date is after 1 October 2010, and payment commences after this date, the premium will be calculated using a GST rate of 15%.

If you have an existing policy in place and the start date of that policy is before 1 October 2010, your premiums will be calculated using a GST rate of 12.5%. This rate will apply until your next policy renewal date at which point the GST rate of 15% will apply.

If your policy start date is before 1 October 2010, your premium instalments will be calculated using a GST rate of 12.5%. This rate will apply until your next policy renewal date at which point the GST rate of 15% will apply. If your policy start date is after 1 October 2010, and payment commences after this date, your premium instalments will be calculated using a GST rate of 15%.

If your policy start date is before 1 October 2010 and you pay your premium annually, your premium will be calculated at a GST rate of 12.5%. This rate will apply until your next policy renewal date at which point the GST rate of 15% will apply.

If your policy start date is after 1 October 2010 and you pay your premium annually, your premium will be calculated at a GST rate of 15%.

If you reinstate a lapsed policy within 90 days of it lapsing, the GST rate applied will be the GST rate that was applied when that policy lapsed.

If you have any queries, please contact Client Services