Stamp duty law is also completely different from Australian income tax rules and can be extremely complex to navigate. This is because different ‘classes’ of insurance each have different rates of duty and the liability to pay can switch between the insurer and the insured.
Typically, the insurer pays duty and passes the costs onto the insured. But if the insurer is not required to be registered as an insurer in the relevant State, the obligation to pay insurance duty will then fall on the insured party when obtaining, effecting or renewing any insurance.
This is of particular relevance to you if:
- you are insured by an offshore captive insurer
- your offshore parent company takes out group insurance that covers Australian subsidiaries and/ or operations
- you are using an offshore broker to access the foreign insurance market
Insurance duty is calculated on the GST-inclusive amount provided by the insured to the insurer (i.e. premium). Each jurisdiction imposes duty at different rates depending on the type of insurance (e.g. general insurance or life insurance). The rates range from 6 percent to 11 percent. It is also possible to divide the premium across particular types of insurance and to apportion the premium across different jurisdictions if the insured ‘risk’ is located in more than on jurisdiction.
There is no limitation for assessments. Whoever is liable has to lodge an insurance duty return by the 21st day of the month and pay the duty, calculated on the premiums received or paid during the preceding month.
If you are (or think you may be) insured by a non-registered insurance company, you should seek Australian duty advice to check that your obligations are being met and to avoid the risk of any interest and penalties.