When you pay insurance in Victoria, your premium generally includes a 10 per cent duty charge
Taking out general insurance can protect the things you value, such as your home, car or possessions. When you buy a policy in Victoria, your insurer is charged 10 per cent duty but this cost is generally passed on to you in the premium you pay.
Where you have taken out insurance with an unregistered insurer, however, such as an international insurance contract, you are responsible for paying the 10 per cent duty charge.
Duty applies if you insure aircraft that land and take off in Victoria.
If your aviation insurer is registered in Australia, they remit the duty on your behalf when you pay or renew a premium. But if your policy is with an insurer that is not registered in Australia, you are responsible for paying duty and lodging returns as an insured person with the State Revenue Office.
Please review your circumstances to ensure you are complying with the law. Penalties may apply if you do not voluntarily disclose any unpaid duty.
How is duty calculated?
Duty is charged at the rate of 10 per cent on the premium paid to your insurer, including any commission and GST. The following example shows how duty is calculated.
|Policy premium (GST exclusive)||$500|
|Commission (GST exclusive)||$25|
|Duty charge (10% of $577.50)||$57.75|
|TOTAL YOU PAY||$635.50|
While duty on life insurance was abolished on 1 July 2014, you may still need to pay duty where a rider (additional insurance) is attached to your life insurance policy.
In these cases, we calculate duty based on the cost of the additional insurance in your premium. If we do not consider this amount correctly reflects the additional insurance, we have discretion to determine a new premium.
Types of insurance
Duty applies to any kind of general insurance premium you pay that relates to:
- A property and/or its contents in Victoria.
- A risk, contingency or event that may occur within, or partly within, Victoria.
Car, home and contents, trauma and disability are examples of insurance that attract duty, which is factored into your premium. You also pay duty on insurance for reverse annuities. A reverse annuity is a loan which is eventually repaid by a person's deceased estate.
Are there any exemptions?
Exemptions include insurance for:
- Hospital or medical benefits.
- Goods and merchandise, or the freight thereof, carried by land, sea and air.
- The physical hulls of a floating vessel used primarily for commercial purposes.
From 1 July 2017, these additional exemptions are available:
- Crops which are being grown, harvested or stored.
- Agricultural machinery.
When and how is duty paid?
Insurers must lodge a monthly return, showing all premiums collected in the preceding month, and pay on or before the 21st day of each month.
If your insurer is not registered under the Act, you are responsible for paying the duty and must lodge a return as an insured person and pay within 21 days after the end of the month in which you paid the relevant premium.
A return must be lodged even if you do not have to pay duty that month. A 'nil' return can be faxed to us on (03) 9628 6851 or emailed to email@example.com (please use your customer number as a reference in the subject line) on or before the 21st day of the following month.
What is an insurer?
An insurer is a person or entity that:
- Writes insurance (not as an intermediary, for example, brokers)'
- Does so other than as an insurance intermediary (for example, brokers)'
- Is either authorised under the Insurance Act 1973 (Cth) to carry on insurance business, or registered under the Life Insurance Act 1995 (Cth)'
Insurers must be registered in Victoria under the Duties Act 2000 (the Act).
Getting it right
Our priority is to help you pay the right amount of tax at the right time. Learn more about how we do this.