If you’re a business or rental property owner, you may need to declare some insurance payments in your income tax and GST returns. These could affect the amount of tax you pay. For example, the following insurance payments are taxable:
- loss of profits
- loss of rents
- reimbursement of business expenses
- destroyed or depreciated assets.
Due to the large numbers of businesses receiving insurance settlement payments in Canterbury, the IRD are working with the insurance industry to help businesses and rental property owners get it right.
Some common mistakes might be not declaring insurance payments as income, not accounting for GST or not returning depreciation recovered when the payment is for a depreciable asset.
To avoid errors, you should keep all records relating to insurance payments for your business or rental property or ask your accountant or tax agent for help with understanding your tax obligations.
Call in or phone us for more information.