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Australian Capital Territory to abolish stamp duty on insurance premiums

1 July 2016 sees the completion of the Australian Capital Territory’s major reforms to insurance taxes, which have taken place over the past five years.

1 July 2016 sees stamp duty on premiums of general insurance in the Australian Capital Territory (ACT) reduce to nil from the current rate of 2%. And stamp duty on life insurance premiums will also become nil, from 1%. This completes the major reforms in the ACT to insurance taxes, which has taken place over the past five years.

Significant reforms to the ACT’s taxation system began in the 2012-2013 Budget, where the government announced that duties on general insurance would be reduced by 2% per annum. In addition, duties on life insurance would be reduced by 1% each year. The reduction of duties commenced 1 October 2012 and will be fully abolished on 1 July 2016. The below table illustrates the reform process.

Changes in duty on insurance tax rates - ACT

 
 
Current
From
01/10/2012

1/7/2013

1/7/2014

1/7/2015

1/7/2016
General Insurance  10% 8%  6%  4%  2%  0%
Life insurance,
including term,
temporary or insurance
 rider polices
 5% 4% 3% 2% 1% 0%
Other life insurance            
Sum insured less than
or equal to $2,000 
 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00
Sum insured greater
than $2,000
$1 plus $0.2 per
$200 or part thereof
in excess of $2,000
$0.8 plus $0.16 per
$200 or part thereof
in excess of $2,000
$0.6 plus $0.12 per
$200 or part
thereof in excess of
 $2,000
$0.4 plus $0.08
per $200 or part
thereof in excess
of $2,000
$0.2 plus $0.04
per $200 or part
thereof in
excess of $2,000
 $0.00

Abolition of stamp duty in other states and territories of Australia

The Northern Territory cut stamp duty on life insurance premiums completely from 5% down to zero with effect from 1 July 2015. All term life policies were also included in the duty exempt regime. 

Victoria abolished duty payable on life insurance policies from 1 July 2014. As a consequence of this measure, amendments were made to the insurance duty provision of the Duties Act 2000 to define life insurance policy riders in order to clarify when riders attached to life insurance policies are subject to insurance duty.

As a result of a total abolition of stamp duty in the ACT, stamp duty is ultimately nil in all states and territories on the insurance classes of Marine, Cargo and Goods in Transit.

Talk to us

IPT Quote, TMF Group’s online calculation tool, is always at the forefront of up-to-date taxes for our global users. Users can not only see the abolishment of stamp duty when entering an advanced day into IPTQ, but they can also extract back-dated rates should they wish to compare the tax outcome resulting from tax rate changes. In terms of tax administration, broker users who create a quote containing a global program will see their liability to settle stamp duty in the ACT removed. This relief of tax settlement will apply to Australian insurer users writing business without involving a local broker.

Need more information? Get in touch with our IPT experts.

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