There are very few supplies of goods or services which are fully exempt from GST, but life insurance, is one of them. That is a big saving, especially given that GST rates have only ever gone up.
While GST started at a rate of 10.0%, it was increased to 12.5% and then to 15.0%, a rate which is now 50% higher than when it began. And there is no guarantee that it will not be increased again.
Pursuant to sections 3 and 14 of the Goods and Services Tax Act 1985, life insurance premiums, are fully exempt from GST. This is explained further in Inland Revenue’s Tax Information Bulletin, Volume 13, Number 7.
Did You Know?
GST forms a much greater percentage of the total tax paid by the average person than is commonly realised. According to Government financial statements prepared by the Treasury, more is paid in GST each year than is paid by individuals as PAYE income tax.
While you have little control over how much PAYE tax is deducted from your earnings, you have a lot more say over how much GST you pay. The greater the percentage of your pay packet which you spend on things which are exempt from GST, the less GST (and therefore the less total tax) you will tend to pay.
