In the 2017/18 NSW State Budget, the NSW Government announced that from 1 January 2018 there would be an exemption of Stamp Duty to certain insurance products for Small Business.
A small business is an entity which is an individual, partnership, company or trust (as defined under section 152-10 (1AA) of the Income Tax Assessment Act 1997) that:
- is carrying on a business, and
- has an aggregated turnover of less than $2 million.
What types of insurance are eligible for the exemption?
The types of insurance that may be eligible include:
- Commercial vehicle insurance, for a motor vehicle that is used primarily for business purposes.
- Commercial aviation insurance for an aircraft that is used primarily for business purposes.
- Occupational indemnity insurance (or professional indemnity insurance) covering liability arising out of the provision by a person of professional services or other services (other than medical indemnity cover).
- Product and public liability insurance covering liability for personal injury or property damage occurring in connection with a business or arising out of the products or services of a business.
How to obtain the Exemption
The exemption only applies to insurance policies effected or renewed on or after 1 January 2018.
For a policy to be exempt, the insured must be a small business as at the date the policy is effected or renewed and the insurer must have a small business declaration. If an insurer does not have a small business declaration as at the date the policy is effected or renewed, then the policy is liable to duty.
If the required Declaration is received after the time that the contract of insurance is effected or renewed, an insurer would be able to seek a reassessment for the period where the duty was paid and a refund of overpaid duty from Revenue NSW. In the event that the insurer is unable to recover the stamp duty already paid, the insurer reserves the right not to make any premium adjustment or refund or deduct the reasonable costs of any recovery.
To apply for the NSW Stamp Duty Exemption, download the small business declaration and submit to your Insurer or Broker.
What happens if a false Declaration is made?
We recommend you obtain appropriate professional advice and/or otherwise reasonably satisfy yourself that the Declaration is not false or misleading as:
- A court may impose a penalty of up to $11,000 for an individual and $55,000 for a corporation,
- the insured may be required by the insurer to pay to the insurer an amount equal to the duty, together with any interest or penalty tax payable. The insurer may recover this amount as a debt if the amount is not paid.
For more information, go to NSW Revenue website and/or refer to the Duties Act 1997 (NSW)
Disclaimer – “This material contains general information only and may not suit your particular circumstances. To decide if a policy is right for you please carefully read the relevant Product Disclosure Statement (PDS) and/or Policy wording. While we have exercised due care and skill in preparing this information, Optimum Insurance Services (Optimum) does not accept any legal responsibility or liability for negligence or otherwise to you or anyone else who seeks to rely on this information. This includes, without limitation, loss arising from a possible failure of the information to comply with statutory or regulatory requirements or the failure of the information to identify other terms and conditions beyond those considered in this document. You should obtain advice to ensure that your policy provides adequate cover for your circumstances. “Optimum Insurance Services Pty Ltd is a Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd (Car No. 291220), Australian Financial Services Licence No 240549, ABN 15 003 886 687.”
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