Singapore legislation
Regulation 41A
Regulation 41A
Input tax deemed incurred in relation to insurance cash payments
Subregulation 1
This regulation shall apply where the period of insurance cover under a contract of insurance commences on or after 1st January 2007.
Subregulation 2
Subject to paragraph (3), where the premium payable under the contract of insurance is subject to the tax rate in force under section 16 of the Act, the insurer shall be deemed to have incurred input tax on any cash payment made by him upon the occurrence of an insured event and which is obligatory under that contract of insurance (referred to in this regulation as deemed input tax), except in such situation as the Minister may decide otherwise for the protection of revenue.
Subregulation 3
Paragraph (2) shall only apply where the contract of insurance is taken out by a person who, at the time the insurance cover commences under that contract —
is not registered under the First Schedule to the Act, or is a taxable (Seventh Schedule) person other than a registered (Seventh Schedule — full) person;
is a sole proprietor who is registered under the First Schedule to the Act and who purchased the insurance cover other than in the course or furtherance of his business;
where the contract is for medical and accident insurance, is registered under the First Schedule to the Act and is disallowed under regulation 26 from claiming any credit under sections 19 and 20 of the Act on any input tax incurred on the premium paid on that contract; or
where the contract is for motor car insurance, is registered under the First Schedule to the Act and is disallowed under regulation 27 from claiming any credit under sections 19 and 20 of the Act on any input tax incurred on the premium paid on that contract.
Subregulation 4
Where an insurer incurs deemed input tax under paragraph (2) —
the cash payment made by the insurer to which the deemed input tax relates shall not be treated as consideration for any supply made to the insurer;
the amount of deemed input tax shall be an amount equal to the relevant tax fraction of the cash payment; and
the deemed input tax shall be treated as having been incurred by the insurer in the prescribed accounting period in which the cash payment was made by him.
Subregulation 5
Except as the Comptroller may otherwise allow, an insurer making a claim for the deduction of deemed input tax shall keep a record of that claim consisting of information showing that —
the period of insurance cover under the contract of insurance commenced on or after 1st January 2007;
the premium payable under the contract of insurance was subject to the tax rate in force under section 16 of the Act;
the cash payment was made by him upon the occurrence of an insured event;
the payment was obligatory under the contract of insurance; and
the person who entered into the contract for insurance with him was a person specified in paragraph (3).
Subregulation 6
If an insurer recovers from any person (other than his re-insurer under a re-insurance contract) the cash payment referred to in paragraph (2) or any part thereof —
the deemed input tax on the cash payment shall be reduced by an amount equal to the relevant tax fraction of the sum recovered in the prescribed accounting period in which the sum was recovered; and
where the insurer has claimed and deducted the deemed input tax, he shall account and repay to the Comptroller the amount of the adjustment in the prescribed accounting period referred to in sub-paragraph (a).
Subregulation 7
In this regulation, “relevant tax fraction” means the fraction calculated in accordance with the following formula:where Xis the rate of tax applicable to the insurance premium for the period of insurance cover giving rise to the cash payment.