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When you take out an insurance policy, you generally pay duty as part of your premium.

Issues arising from the coronavirus pandemic for life insurers

Where there are changes to life insurance policies due to financial distress to customers caused by coronavirus, the State Revenue Office has confirmed how it will apply the grandfathering rules for policies obtained before 2014.

There are four specific circumstances related to this issue.

Who pays insurance duty?

When you buy a policy in Victoria, such as for your home, car or possessions, your insurer is charged 10% duty, a cost that is generally passed on to you in the premium you pay.

If you have taken out insurance with an unregistered insurer, such as an international insurance contract, you are responsible for paying the 10% duty charge.

From 1 July 2024, duty on certain business insurance premiums will be gradually abolished over a 10 year period. Find out more about this change.

Insuring aircraft that land and take off in Victoria

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.
  • 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.

Types of insurance

Duty applies to any kind of general insurance premium you pay that relates to:

  • A property and its contents in Victoria.
  • A risk, contingency or event that may occur within, or partly within, Victoria.

Examples of insurance that attract duty, which is factored into your premium, are car, home and contents, trauma and disability insurance. You also pay duty on insurance for reverse annuities, which are loans that are eventually repaid by a person's deceased estate.

How is duty calculated?

There are different rates of duty for business insurance premiums and non-business insurance premiums. 

For non-business insurance, duty is charged at the rate of 10% on the premium you pay to your insurer, including any commission and GST.

For example, on a $500 non-business premium, the calculation is as follows: $500 (policy premium ex GST) + $25 (commission ex GST) = $525 (net premium) + $52.50 (GST) = $577.50 (gross premium) + $57.75 (duty charge, which is 10% of $577.50) = $635.25 (total you pay).

For business insurance premiums, duty will be gradually abolished over a 10-year period from 1 July 2024. The rate will reduce by 1% per year until 2033, when it is abolished for contracts effected or renewed from 1 July 2033. Find out more about this change.

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.

Are there any exemptions?

Exemptions include insurance for:

  • Hospital or medical benefits.
  • WorkCover.
  • 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 being grown, harvested, or stored.
  • Livestock.
  • 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. A return must be lodged even if duty does not need to be paid that month. 

If your insurer is not registered, 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.

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 an insurance business, or registered under the Life Insurance Act 1995 (Cth).

Insurers offering general insurance in Victoria under the Duties Act 2000 (the Act) must register with us.

Getting it right

Please review your circumstances to ensure you are complying with the law. Penalties may apply if you do not voluntarily disclose any unpaid duty.

Our priority is to help you pay the right amount of duty at the right time. Learn more about how we do this.

Last modified: 13 June 2024

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