Gradual Abolition of Duty on Business Insurance Premiums

Finally, a measure to reduce the cost of doing business.

The State Revenue Office in Victoria recently announced an abolition of duty on business insurance premiums over a 10-year period. ‘Business insurance’ refers to policies taken out by businesses covering public and product liability, professional indemnity, employers’ liability, fire and industrial special risks, marine and aviation insurance.

This means that duty on premiums paid in relation to contracts of business insurance that were previously chargeable (i.e. 10% of the amount of the premium) will be reduced by 1% per annum from 1 July 2024 until it is completely abolished from 1 July 2033. This is an automatic process, therefore affected businesses don’t need to apply for an exemption.

This change is slow, but will gradually assist businesses with insurance costs.

General insurance is defined as any kind of insurance that is applicable to (i) property in Victoria; or (ii) a risk, contingency or event concerning an act or omission that, in the normal course of events, may occur wholly, or partly within Victoria. For example, business, car, home and contents, trauma and disability insurance.

When you purchase an eligible insurance policy, you generally pay stamp duty as part of your premium.

General insurance does not include insurance that is exempt from duty by Division 5 of the Duties Act 2000 (Vic), that is, medical benefits insurance, life insurance, accident compensation, workers compensations insurance, crop insurance, livestock insurance, and such like.

Not for Profit Organisations are welcoming this change as this is currently one area of Stamp Duty where they do not qualify for an exemption.

Lewis Holdway Lawyers provides legal advice in relation to various duty exemptions and concessions for businesses and not-for-profit organisations. Contact Ita Wong ita.wong@lewisholdway.com.au or John Wardlaw johnw@lewisholdway.com.au if you have any questions about this topic.