Abolition of insurance duty from 1 July 2016
As part of the ACT's taxation reform measures, duty on general and life insurance was fully abolished on 1 July 2016.
For premiums paid on or after 1 July 2016, the rate of duty is nil.
The Commissioner for ACT Revenue has issued a disallowable instrument for special arrangements for lodgement of returns; under the DI insurers are exempt from the requirement to lodge monthly returns to the Revenue Office. See http://www.legislation.act.gov.au/di/2016-157/default.asp
Duty on premiums paid before 1 July 2016
Duty is payable on the amount of premium paid in relation to a contract for general or life insurance. Normally this duty is paid by policyholders to insurance companies. Insurance companies then submit returns and payments on or before the 21st of each month to the Revenue Office.
Amateur sporting and community not-for-profit bodies may be exempt from duty on public liability insurance and other prescribed general insurance required to hold a public event. Organisations must apply to the ACT Commissioner for Revenue to determine eligibility for exemption. Further details are provided in the Duty Exemption Guidelines.
The amount of duty payable will depend on the type and value of insurance policy. For 2015-16 the rates of insurance duty were as follows:
- Duty on general insurance contracts (including disablement or sickness policies) is calculated at the rate of 2% of the net premiums received.
- Duty on life insurance policies that are term, temporary, or insurance rider policies is calculated at the rate of 1% of the first year's premium.
- Duty on life insurance contracts is 20 cents on the first $2,000, or part of $2,000, of the total sum insured; AND 4 cents for every $200, or part of $200, of the total sum insured that is more than $2,000.
General Insurance Duty Adjustments
For policies that have been cancelled under an earlier duty rate period, an adjustment formula can be applied to the online return form. The adjustment formula will ensure the amount payable under a monthly return will be reduced by the same amount as the duty refund amount for an earlier period. For further information refer to Revenue Circular DAA013.1 - General Insurance Duty Adjustments [RTF, 196KB], [PDF, 159KB].