Mainzeal & Ors v IRD - [2026] NZHC 2715

Dispute whether Mainzeal’s receipt of indemnity payment under D&O policy for damages for directors’ breach of duties (ordered by SC in 2023) subject to GST under s 5(13) GST Act. Section 5(13) provides GST payable on payment under contract of insurance, whether or not party to contract, that relates to loss incurred in taxable activity. Held: GST payable on Mainzeal’s receipt of indemnity payment. Section amended in 2000 to ensure insurance payments to registered third parties are subject to output tax in hands of third party. ‘Under contract of insurance’ means receipt which contractually entitled to but ‘whether or not party to contract’ alters requirement for contractual relationship. ‘Relates to loss incurred’ not confined to insured’s loss but includes loss incurred in furtherance of taxable activity. Despite internally inconsistent language, intention of amendment clear to impose GST liability on third parties on actual receipt of a payment made under a contract of insurance.