Stamp Duty on Insurance

What is required?

The Stamp Duties Act 1923 requires that every company, person or firm of persons which carries on any insurance business in South Australia in relation to risks situated in this State must be licensed.

Where a company, person or firm of persons DO NOT carry on any insurance business in South Australia, but insures risks, contingencies or events in South Australia, stamp duty in relation to those risks, contingencies or events must be paid to RevenueSA. In this situation the responsibility for payment of the stamp duty rests with the customer taking out the insurance and not the insurance company (see South Australian risks insured outside South Australia below).

In the case of the provision of life insurance business, a company, person or firm of persons carrying on a business in South Australia must be licensed irrespective of where the risk is situated.

Who is involved?

Insurance business is made up of two distinct types of risks:

1. risks relating to general insurance; and
2. risks relating to life insurance.

General Insurance

Companies or persons that carry on general insurance business in South Australia must take out an Annual Licence in January of each year. The company or person must also submit a Return each month providing details of premiums received and forward any stamp duty payable to RevenueSA.
Companies or persons not carrying on general insurance business in South Australia, but who insure risks located within South Australia are required to provide the Commissioner with an Insurance Effected Outside South Australia - Return under Section 42AA. The return must be provided within one month of writing the insurance policy and the appropriate duty paid. An example would be where a multinational organisation with a business operation in South Australia places its entire insurance centrally either interstate or overseas with a company that does not carry on business in South Australia. In this situation it would be the responsibility of the multinational organisation to lodge the return and pay the duty.

Life insurance

Companies or persons that carry on life insurance business in South Australia (whether the risk is within South Australia or elsewhere) are required to take out an Annual Licence in January of each year. The assessment of the Annual Licence (and stamp duty payable) will be based on the premiums received in the previous calendar year in respect of persons resident in South Australia. A minimum of $100 is payable for an Annual Licence in respect of life insurance.

Application for Annual Licence should be made on the prescribed form. This form is to be completed in full including:

• details of the organisation;
• the type of insurance business it is carrying on;
• the date form which it commenced business in south Australia;
• details of all gross premiums received for the current financial year.

What is the Rate of Stamp Duty?

On-line calculator for Life Insurance
On-line calculator for General Insurance

How are premiums apportioned between jurisdictions?

In each of the Australian States and Territories, stamp duty on insurance (other than life insurance) is calculated on the total of all premiums paid or payable for an insurance policy. For the purposes of remitting stamp duty to the appropriate State/Territory, based on where the risk is located, premiums must be apportioned.

A schedule showing the basis upon which the premium paid or payable on appropriate general insurance policies is to be apportioned for stamp duty purposes is currently being reviewed by RevenueSA and will be re-issued shortly.

Where there are alternative methods available, the method of apportionment adopted should be based on the method of calculating premium for the policy measuring factors. The policy measuring factor is the factor used as a basis for establishing the risk/premium under an insurance policy. For example where the premium for a public liability policy is based on floor area units then the stamp duty should be apportioned in the same manner.

What happens when the risk is reinsured?

The Act does not impose stamp duty on any portion of the premium received, which is subsequently paid away as reinsurance PROVIDED that the reinsurance is effected in South Australia with a company or person who is required to include the reinsured premiums received in a monthly return to this Office. This ensures that the duty is only paid once. It is important to note that where the reinsurance is placed with a company or person not required to submit a monthly return to this Office (eg an insurance company operation interstate or overseas), it cannot be excluded from the monthly return.

Reinsurance figures are deducted from the gross premium figure before being entered in the return.

How is stamp duty calculated on Life Insurance Riders?

Where a life policy is issued with riders of a general nature attached and a separate premium component in respect of that rider can be determined with certainty, stamp duty at the general rate is payable on that portion of the premiums attributable to the rider benefit.

This page was last reviewed 26 October, 2007