1800 762 872

IMPORTANT changes to stamp duty on insurance for small businesses in NSW


The NSW Government is making changes to stamp duty on insurance for small businesses in NSW

From 1 January 2018 small businesses with aggregated annual turnover of less than $2 million are not required to pay stamp duty on:

  • Commercial vehicle insurance – for a motor vehicle used primarily for business purposes;
  • Commercial aviation insurance – for an aircraft that is used primarily for business purposes;
  • Occupational indemnity insurance – insurance covering liability arising out of the provision by a person of professional services or other services (other than medical indemnity cover within the meaning of the Medical Indemnity Act 2002 (Cth)); and
  • Product and public liability insurance – 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.
  • Crop and livestock insurance.

To obtain the benefit of the exemption you must be an eligible small business and provide a written small business declaration to your insurer.

Determining whether you are a small business under the definition in the Act can be complex. In summary:

You are a small business if you are an individual, partnership, company or trust that:

  • Is carrying on a business, and
  • The business has an aggregated turnover of less than $2 million.

Aggregated turnover is your annual turnover plus the annual turnovers of any business entities that are your affiliates or are connected with you.

If you are unsure whether the definition of small business applies to you for the purposes of determining your eligibility for the stamp duty exemption, visit Revenue NSW’s website for more information or obtain qualified tax advice. Aon is not able to provide tax advice, such as whether you are eligible for the stamp duty exemption.

It is your responsibility as the insured to determine your eligibility for the exemption. Your insurer will rely on this declaration in applying the stamp duty exemption for small businesses on relevant insurance products in NSW. If you claim the small business exemption and are not entitled to it, you may be required by the insurer to pay 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. You may also be liable to penalties under relevant laws. Neither Aon nor your insurer is responsible or liable for incorrect or dishonest declarations.

A new declaration is required at each renewal period to satisfy legislative requirements.

To confirm your eligibility for the exemption, please complete and return the declaration which can be downloaded here.

FAQs

Why is the NSW Government changing stamp duty requirements?

The NSW Government has made changes to stamp duty legislation as part of its budget announcements on 20 June 2017. This change will make insurance more affordable for small businesses and farmers.

What is considered a small business?

It is an insureds responsibility to determine their eligibility for the small business exemption. Aon is not in a position to provide tax advice, such as whether the client meets the small business definition. If they would like further advice on this matter direct them to NSW Revenue’s website or recommend they obtain qualified tax advice.

A small business is defined in section 259A of the Duties Act 1997 (NSW) by making reference to Commonwealth law. Below is the suggested declaration from Revenue NSW which summarises this definition.

I am a CGT small business entity (within the meaning of section 152-10 (1AA) of the Income Tax Assessment Act 1997 of the Commonwealth) for the income year in which the insurance is effected or renewed.

Note: You are a small business if you are an individual, partnership, company or trust that:

  • Is carrying on a business, and
  • The business has an aggregated turnover of less than $2 million.

Aggregated turnover is your annual turnover plus the annual turnovers of any business entities that are your affiliates or are connected with you.

Are there any penalties for false declarations of eligibility?

Yes, penalties apply if false declarations are made. It is the insureds responsibility to determine their eligibility for the exemption. The insurer will rely on this declaration in applying the stamp duty exemption for small businesses. If the insured claims the small business exemption and is not entitled to it, they may be required by the insurer to pay an amount equal to the duty, together with any interest or penalty tax payable. The insurer may recover this amount as a debit if it is not paid. In addition, the client may also be liable for a penalty of up to $11,000.

Further information

For more information contact HIAIS on 1800 633 467, or visit the NSW Revenue website.

Contact
1800 762 872