Duties Act 1997 No 123
Current version for 28 October 2014 to date (accessed 23 November 2014 at 03:33)
Chapter 8

Chapter 8 Insurance

Part 1 General insurance

229   Imposition of duty

(1)  This Part charges duty on the amount of the premium paid in relation to a contract of insurance that effects general insurance (whether or not it also effects other kinds of insurance).
(2)  The amount of duty is required to be paid each time a premium is paid in relation to a contract of insurance that effects general insurance.
Notes. 

(1)   General insurance is defined in section 230.

(2)   Premium is defined in section 231.

(3)   The time at which a premium is paid is determined by section 232.

(4)   Generally, the insurer to whom the premium is paid is the person liable to pay the duty. But there are circumstances in which the person insured is liable to pay the duty. These circumstances are set out in section 236.

(5)   To facilitate payment of duty, insurers must register themselves with the Chief Commissioner, submit a monthly return showing the total amount of premiums paid to them for general insurance during the preceding month and pay the appropriate amount of duty when submitting the return. The provisions that deal with this are in Part 3.

230   What is “general insurance”?

(1)  General insurance is any kind of insurance that is applicable to:
(a)  property in New South Wales, or
(b)  a risk, contingency or event concerning an act or omission that, in the normal course of events, may occur within, or partly within, New South Wales,
or both.
(2)  General insurance does not include life insurance, a life insurance rider or insurance that is exempt from duty by Part 5.

231   What is a “premium” in relation to general insurance?

(1)  Premium, in relation to general insurance, means the total consideration given to an insurer by or on behalf of the insured person to effect insurance without deductions for any amounts paid or payable, or allowed or allowable, by way of commission or discount to an insurance intermediary.
(2)  Premium includes a fire service levy and emergency service levy paid or payable in connection with insurance by an insurer or any other person.
(3)  Premium does not include:
(a)  an amount paid to an insurance intermediary by the insured person as a fee, provided that the amount can be clearly identified as a fee, or
(b)  an amount of duty under this or a corresponding Act.
(4)  It is immaterial where the amount is paid or where the insurance is effected.

232   When is a premium “paid”?

(1)  A premium, or an instalment of a premium, is paid for the purposes of this Chapter when the first of the following events occurs:
(a)  the premium or instalment is received by the insurer, or
(b)  an account of the insurer is credited with the amount of the premium or instalment.
(2)  A premium or instalment of a premium (apart from the case where the premium or instalment is received directly by an insurer) is taken to have been received by an insurer if it is received by another person on the insurer’s behalf.

233   Types of general insurance

(1)  For the purpose of charging duty, general insurance is divided into 3 types, Type A insurance, Type B insurance and Type C insurance.
(2)  Type A insurance is general insurance other than Type B insurance or Type C insurance.
(2A)  Type B insurance is:
(a)  motor vehicle insurance, being insurance covering any one or more of the following:
(i)  the loss (including the loss by theft) of a motor vehicle,
(ii)  damage to a motor vehicle,
(iii)  loss of or damage to property by a motor vehicle,
being a motor vehicle within the meaning of the Motor Accidents Compensation Act 1999, or
(b)  aviation insurance, being insurance covering any one or more of the following:
(i)  the loss (including the loss by theft) of an aircraft,
(ii)  damage to aircraft,
(iii)  the death of or injury to a person by an aircraft or a thing falling from an aircraft,
(iv)  the loss of or damage to property by an aircraft or a thing falling from an aircraft, or
(c)  disability income insurance, being insurance effected by a contract of insurance under which an amount is payable in the event of disablement of the insured by accident or sickness, or
(d)  occupational indemnity insurance, being insurance covering liability arising out of the provision by a person of professional services or other services, or
(e)  hospital and ancillary health benefits insurance, being insurance covering liability incurred in respect of fees or charges for hospital treatment, or for health care ancillary to hospital treatment, if the liability is not covered by a private health insurer within the meaning of the Private Health Insurance Act 2007 of the Commonwealth.
(3)  Type C insurance is:
(a)  crop insurance, being insurance covering:
(i)  loss due to the destruction of, or physical damage to, any pasturage or any crop of grain, fruit, vegetables or other plants, where the destruction or damage occurs while the pasturage or crop is being grown, or
(ii)  loss due to the destruction of, or physical damage to, the product of any such pasturage or crop, where the destruction or damage occurs while the product of the pasturage or crop is being stored or transported,
but not being insurance covering loss referred to in subparagraph (ii) unless the contract by which the insurance is effected also effects insurance covering the loss referred to in subparagraph (i), or
(b)  livestock insurance, being insurance covering:
(i)  loss due to the death of, or physical damage to, any animal, whether domesticated or wild, or
(ii)  loss due to the death of, or physical damage to, any genetic material of any such animal, or
(iii)  loss due to the theft of any such animal or genetic material, or
(c)  until 31 January 2010, insurance under the Debtor Insurance Scheme of the Stock and Station Agents Association.

234   What duty is payable?

(1)  The amount of duty chargeable on the premium paid in relation to a contract of insurance is 9% of the amount of the premium to the extent to which the premium is paid to effect Type A insurance.
(2)  The amount of duty chargeable on the premium paid in relation to a contract of insurance is 5% of the amount of the premium to the extent to which the premium is paid to effect Type B insurance.
(3)  The amount of duty chargeable on the premium paid in relation to a contract of insurance is 2.5% of the amount of the premium to the extent to which the premium is paid to effect Type C insurance.

235   Who is liable to pay the duty?

The general insurer is liable to pay the duty, except as provided by section 236.

236   Circumstances in which duty is payable by the insured person

(1)  This section applies to a person who obtains, effects, or renews any general insurance as an insured person with a person who is not a registered insurer.
(2)  A person to whom this section applies must, within 21 days after the end of the month in which the premium relating to the insurance is paid to the person who is not a registered insurer:
(a)  lodge with the Chief Commissioner a return in the approved form containing such particulars and information as to the premium and the insurance as the Chief Commissioner may require, and
(b)  pay to the Chief Commissioner as duty the amount calculated in accordance with section 234.
(3)  A person to whom this section applies is taken to have complied with this section if the person’s duty under this section is discharged by another person acting on the person’s behalf.
(4)  The payment of a periodic premium in respect of disability income insurance that is continued, but not renewed, on the payment of the premium is taken to effect the insurance for the purposes of this section.
(5)  In this section:

premium means any amount paid in connection with insurance to a person who is not a registered insurer that would be a premium under this Part if the person to whom it was paid was a registered insurer.

Note. Because this section imposes liability for duty on an insured person if the insured person arranges insurance with an insurer who is not registered, it would always be prudent to check the registered status of the insurer. This may be done by inspecting the register kept under section 252 by the Chief Commissioner.

237   Records to be kept

A person to whom section 236 applies must maintain records that contain information as to:
(a)  the nature and location of the property insured, and
(b)  the nature and location of each risk, contingency or event insured, and
(c)  the amount of the premiums paid in relation to each contract of insurance.

238   Refunds where premiums are returned

(1)  A general insurer or a person to whom section 236 applies is entitled to a refund of duty if the general insurer refunds, or there is refunded to the person, the whole or a part of a dutiable premium in respect of the contract of insurance for which duty has been paid.
(2)  The refund is the duty paid on the amount of the premium refunded.
(3)  A general insurer to whom duty is refunded may apply the amount of the refund to offset any other payment required to be made under this Act by the general insurer.

Part 2 Life insurance

239   Imposition of duty

This Part charges duty on:
(a)  a policy of life insurance, and
(b)  a life insurance rider.
Notes. 

(1)   Insurance is defined in the Dictionary to include assurance.

(2)   Generally, the insurer with whom the policy is effected is the person liable to pay the duty. But there are circumstances in which the person insured is liable to pay the duty. These circumstances are set out in section 245.

240   What is “life insurance”?

Life insurance means insurance described in section 9 (1) (a)–(g) and 9A of the Commonwealth Life Insurance Act 1995 in respect of:
(a)  a life or lives, or
(b)  any event or contingency relating to or depending on a life or lives,
of a person whose principal place of residence is, or persons whose principal places of residence are, in New South Wales at the time the policy that effects the insurance is issued.

241   What is a “life insurance rider”?

A life insurance rider is insurance that:
(a)  is attached to a policy of life insurance, and
(b)  adds specified events and contingencies to those insured under the policy, and
(c)  is subject to the terms and conditions of the policy.

242   Obligation to make out and execute a policy of life insurance

A life company must, on or before the twenty-first day of each month:
(a)  make out and execute a policy of life insurance for each contract or agreement for life insurance effected by or on behalf of the life company in the preceding month, and
(b)  endorse the policy in the manner approved by the Chief Commissioner.

243   What duty is payable?

(1) Policies of life insurance, other than a temporary or term insurance policy or trauma or disability insurance
The amount of duty chargeable on a policy of life insurance, other than a temporary or term insurance policy, a trauma policy, a TPD policy or a disability income policy is:
(a)  on the first $2,000, or part of $2,000, of the sum insured—$1, and
(b)  for every $200, or part of $200, in excess of the first $2,000—20 cents.
(2) Temporary or term insurance policies
The amount of duty chargeable on a temporary or term insurance policy, other than a group term insurance policy, is 5% of the first year’s premium on the policy.
(2A) Group term insurance policies
The amount of duty chargeable on a group term insurance policy is:
(a)  5% of the first year’s premium on the policy, and
(b)  5% of the amount of the premium (if any) payable in any succeeding year in respect of each additional life covered by the insurance policy (that is, each life that was not covered during the previous year).
(3) Life insurance riders
The amount of duty chargeable on a life insurance rider is 5% of the first year’s premium on the life insurance rider.
(4) Trauma or disability insurance
The amount of duty chargeable on a trauma policy, a TPD policy or a disability income policy is 5% of the premium paid to effect the insurance.
(5)  In this section:

disability income policy means a policy of insurance under which an amount is payable as a replacement of income in the event of the disablement of the insured by accident or sickness.

group term insurance policy means a term insurance policy that applies in respect of the lives of a specified group of persons, being a group the membership of which may change during the term of the policy.

TPD policy means a policy of insurance under which an amount is payable in the event of the total and permanent disablement of the insured by accident or sickness.

trauma policy means a policy of insurance under which an amount is payable in the event of the insured being found to have a stated condition or disease.

243A   Meaning of “premium”

Premium, in relation to a policy of life insurance or a life insurance rider, has the same meaning as it does in Part 1 in relation to general insurance.

244   Who is liable to pay the duty?

The life company or the person issuing the policy or life insurance rider is liable to pay the duty, except as provided by section 245.

245   Circumstances in which duty is payable by the insured person

(1)  This section applies to a person (not being a registered insurer) who effects a policy of life insurance or life insurance rider as an insured person with a person who is not a registered insurer.
(2)  A person to whom this section applies must, within 21 days after the end of the month in which the policy of life insurance or life insurance rider was effected:
(a)  lodge with the Chief Commissioner a return in the approved form containing such particulars and information as the Chief Commissioner may require, and
(b)  pay to the Chief Commissioner as duty the amount calculated in accordance with section 243.
(3)  A person to whom this section applies is taken to have complied with this section if the person’s duty under this section is discharged by another person acting on the person’s behalf.
Note. Because this section imposes liability for duty on an insured person if the insured person arranges insurance with an insurer who is not registered, it would always be prudent to check the registered status of the insurer. This may be done by inspecting the register kept under section 252 by the Chief Commissioner.

246   Refund on cancellation of policy of life insurance

If a premium is refunded to a person because the person cancels a policy of life insurance within 30 days after receiving the policy, a person who has paid duty in respect of the policy is entitled to a refund of the duty.

Part 3 How is duty paid by an insurer?

247   Who is an insurer?

(1)  An insurer is a life company that writes life insurance or a general insurer.
(2)  A general insurer is a person:
(a)  who writes general insurance, and
(b)  who does so otherwise than as an insurance intermediary, and
(c)  who is authorised as a general insurer under the Commonwealth Insurance Act 1973.
Note. Life company and insurance intermediary are defined in the Dictionary.

248   Insurers must be registered

An insurer must be registered under this Part.

Maximum penalty: 100 penalty units.

Note. An offence against this section committed by a corporation is an executive liability offence attracting executive liability for a director or other person involved in the management of the corporation—see section 121 of the Taxation Administration Act 1996.

249   Application for registration

The Chief Commissioner must register an insurer who applies in the approved form for registration under this Part.

250   Cancellation of registration by the Chief Commissioner

(1)  The Chief Commissioner may, by written notice, cancel an insurer’s registration under this Part:
(a)  if the insurer’s authorisation under the Insurance Act 1973 of the Commonwealth is revoked, or
(b)  if the insurer is made bankrupt or, being a company, is wound up, or
(c)  if the insurer is convicted of an offence under an Act imposing duty, or
(d)  if the insurer’s registration was made in error or as a consequence of a false or misleading statement made in relation to the application for registration, or
(e)  if the Chief Commissioner is of the opinion that the insurer has ceased to write general insurance in New South Wales, or
(f)  if the insurer ceases to be a life company, or
(g)  for any other reason the Chief Commissioner thinks sufficient.
(2)  A cancellation of registration has effect from the date specified for the purpose by the Chief Commissioner in the notice of cancellation.

251   Cessation of business and cancellation of registration by the insurer

(1)  A registered insurer who ceases to write insurance business in New South Wales must:
(a)  give written notice of that fact to the Chief Commissioner, and
(b)  lodge the return required to be lodged under this Part, and
(c)  pay the duty payable in connection with the return on or before the twenty-first day of the month after which the notice is given.

Maximum penalty: 100 penalty units.

Note. An offence against subsection (1) committed by a corporation is an executive liability offence attracting executive liability for a director or other person involved in the management of the corporation—see section 121 of the Taxation Administration Act 1996.
(2)  The notice cancels the insurer’s registration under this Part on the day on which it is received by the Chief Commissioner.

252   Register of insurers

(1)  The Chief Commissioner must keep a register of the insurers who are registered under this Part.
(2)  Anyone may inspect the register without charge at the Chief Commissioner’s principal office during the hours that the office is open to the public.

253   Monthly returns and payment of duty

A registered insurer must, on or before the twenty-first day of each month:
(a)  lodge with the Chief Commissioner a return in the approved form showing:
(i)  the total amount of all premiums for Type A insurance paid to the registered insurer in the preceding month, and
(ii)  the total amount of all premiums for Type B insurance paid to the registered insurer in the preceding month, and
(iii)  the total amount of all premiums for Type C insurance paid to the registered insurer in the preceding month, and
(iv)  the total duty payable on policies of life insurance other than temporary or term insurance effected in the preceding month, and
(v)  the total amount of all first year’s premiums for temporary or term life insurance received by or on behalf of the registered insurer in the preceding month, and all additional premiums referred to in section 243 (2A) (b) (other than premiums for insurance that is exempt from duty by Part 5), and
(vi)  the total amount of all first year’s premiums for life insurance riders received by or on behalf of the registered insurer in the preceding month (other than premiums for insurance that is exempt from duty by Part 5), and
(b)  pay to the Chief Commissioner as duty the amounts determined in accordance with sections 234 and 243.

254   Recovery of duty by registered insurer

(1)  A registered insurer may require a person by whom a premium is payable to the insurer to pay the insurer an amount equal to the duty chargeable.
(2)  The requirement is duly made if it is contained in a written request that is given to the person and that specifies the amount of the duty.
(3)  If the amount is not paid, the insurer may recover it as a debt.

Part 4 Apportionment

Division 1 Apportionment of premiums and other amounts between Australian jurisdictions

255   Application of Division 1

(1)  This Division applies to a contract of insurance:
(a)  that insures:
(i)  property in New South Wales as well as property in another place, or
(ii)  a risk, contingency or event concerning an act or omission that, in the normal course of events, may occur within, or partly within, New South Wales as well as within, or partly within, another place,
or both, or
(b)  that insures:
(i)  lives, or
(ii)  any event or contingency relating to or depending on lives,
or both, of persons whose principal places of residence are variously in New South Wales or another place at the time the policy is issued.
(2)  It is the intention of this Division:
(a)  to provide the means for apportioning premiums paid and other amounts in relation to a contract of insurance having regard to the principle in sections 230 (1) and 240, and
(b)  to avoid multiple duty as between Australian jurisdictions, and
(c)  to give Australian jurisdictions their appropriate share of duty by means of the apportionment.

256   Schedule of Apportionment

(1)  The Chief Commissioner may, from time to time, adopt a Schedule of Apportionment for the purpose of apportioning premiums, or premiums paid for specific types of insurance, and other amounts in relation to insurance in accordance with this Division.
(2)  The Schedule of Apportionment may be developed in consultation with any person the Chief Commissioner considers suitable.

257   Apportionment in practice

(1)  A premium or an amount is to be apportioned in accordance with the Schedule of Apportionment adopted for the time being, except as provided by this section.
(2)  An insurer or an insured person may apply in writing to the Chief Commissioner to apportion a premium or an amount on a basis other than that provided by the Schedule of Apportionment. The Chief Commissioner may apportion the premium or amount on the other basis.
(3)  In particular, if the Chief Commissioner is not satisfied that a premium paid or another amount in relation to a contract of insurance has been properly apportioned for each risk insured, the Chief Commissioner may determine the apportionment, reassess the liability to duty and charge duty accordingly.

Division 2 Apportionment of premiums and other amounts as between different types of insurance

258   Apportionment between different types of insurance

(1)  This section applies to apportionment between different types of insurance that are relevant to determining liability for duty, such as general insurance, life insurance and insurance that is exempt from duty. It does not apply to the apportionment of a premium or another amount between New South Wales and another place. Division 1 deals with that kind of apportionment.
(2)  This section also applies to apportionment between different types of insurance referred to in section 233.
(3)  If the Chief Commissioner is not satisfied that a premium paid or another amount in relation to a contract of insurance that effects different types of insurance has been properly apportioned, the Chief Commissioner may determine the apportionment, reassess the liability to duty and charge duty accordingly.

Part 5 Exempt insurance

259   What insurance is exempt from duty?

(1)  The following insurances are exempt from duty under this Chapter:
(a)  insurance covering only property of the Crown in right of New South Wales (including a statutory body representing the Crown in right of New South Wales),
(b)  insurance effected by a separate policy in a distinct sum against loss by fire on the tools, implements of work or labour used by any working mechanic, artificer, handcrafter or labourer,
(c)  insurance taken out by or on behalf of a non-profit organisation having as one of its objects a charitable, benevolent, philanthropic or patriotic purpose,
(d)  insurance taken out by or on behalf of a society or institution for the time being approved for the purposes of this paragraph by the Chief Commissioner whose resources are, in accordance with its rules or objects, used wholly or predominantly for:
(i)  the relief of poverty, or
(ii)  the promotion of education, or
(iii)  any purpose directly or indirectly connected with defence or the amelioration of the condition of past or present members of the naval, military or air forces of the Commonwealth or their dependants or any other patriotic object, or
(iv)  such other purpose as, in the opinion of the Chief Commissioner, warrants the society or institution being taken to be a charitable society or institution,
(e)  insurance covering mortgages or pools of mortgages acquired for the purpose of issuing mortgage-backed securities,
(f)  medical benefits insurance, being insurance effected by a contract of insurance that is issued by a private health insurer within the meaning of the Private Health Insurance Act 2007 of the Commonwealth and that provides hospital benefits or medical benefits (or both), whether or not other benefits are also provided,
(g)  insurance effected under the Workers Compensation Act 1987 or the Workplace Injury Management and Workers Compensation Act 1998,
(h)  insurance effected under the Motor Accidents Act 1988 or the Motor Accidents Compensation Act 1999,
(i)  insurance of:
(i)  the hull of a floating vessel used primarily for commercial purposes, or
(ii)  goods or merchandise, or the freight of goods or merchandise, carried by land, sea or air,
or both,
(j)  redundancy insurance in respect of a housing loan where the sum insured does not exceed $124,000,
(k)  reinsurance (being a contract or contracts between two parties by which one party indemnifies the other against liability or payment under a contract or contracts of insurance or reinsurance),
(l)  an annuity:
(i)  issued, created or sold by a life company,
(ii)  purchased by a person from a life company,
(m)  policies of life insurance, being group superannuation investment policies owned by the trustee of a superannuation plan for the benefit of more than one member of the superannuation plan.
(2)  For the purposes of subsection (1) (l) a contract is an annuity if it satisfies the following requirements:
(a)  the contract provides for the periodic payment of money to the annuitant in fee for life or for a specified term of years as an annual or more frequent entitlement,
(b)  the periodic payment is a sum certain expressed as a dollar amount, but may be varied according to a predetermined formula,
(c)  the periodic payments are not derived from the money paid for the contract but are derived solely from the contract and comprise income and not the repayment of capital.

Part 6 Miscellaneous

260   Effect on contract of insurance of failure to comply with this Chapter

A failure to comply with this Chapter does not render a contract of insurance illegal or invalid.
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