Division 1 Insurers

4   Imposition of tax on insurers

Tax is imposed by this Act on the total annual amount of all premiums received by insurers for general insurance as determined in accordance with this Act.

5   Annual determination of total amount of tax to be collected from insurers

(1)  The total amount of tax that is imposed by this Act on insurers for the year commencing on 1 July 2001, and for each subsequent year, is $65 million, subject to this section.

(2)  The Governor, on the recommendation of the Treasurer, may determine that the total amount of tax imposed by this Act on insurers for a year commencing on or after 1 July 2002 is to be an amount that is specified in the determination and that is less than $65 million.

(3)  A determination of the Governor under subsection (2) is to be made and notified in the Gazette before the year to which the determination applies.

6   Insurers to notify Chief Commissioner of premium income for preceding financial year

(1)  An insurer must, on or before 15 August in each year, lodge with the Chief Commissioner a return in a form approved by the Chief Commissioner specifying:

(a)  the total amount of premiums received by it in relation to general insurance in the preceding year, and

(b)  the total amount of any refunds of premiums made by it in relation to general insurance in the preceding year.

Maximum penalty: 100 penalty units.

(2)  A single return for a year may be lodged on behalf of two or more insurers who are related bodies corporate within the meaning of the Commonwealth Corporations Act 2001.

7   Offence for lodging false or misleading particulars

An insurer is guilty of an offence if it lodges a return under section 6 that is false or misleading in a material particular.

Maximum penalty: 500 penalty units.

8   Apportionment of tax between insurance companies

(1)  On or before 1 September in each year, the Chief Commissioner must:

(a)  make an assessment of the liability of each insurer to pay the tax imposed by this Act for that year, and

(b)  issue a notice of assessment to the insurer of its liability.

(2)  The liability of an insurer to pay the tax imposed by this Act for a year is to be assessed in accordance with the formula:

where:

A is the liability of the insurer to pay the tax imposed by this Act for the year, and

B is the total amount of all premiums received by the insurer for general insurance in the preceding year less the total amount of any refunds of premiums made by it in relation to general insurance in the preceding year, and

C is the total amount of all premiums received by all insurers for general insurance in the preceding year less the total amount of any refunds of premiums made by those insurers in relation to general insurance in the preceding year, and

D is the total amount of tax imposed by this Act for the year as determined in accordance with section 5.

(3)  If an insurer fails to lodge a return as required by section 6, the Chief Commissioner:

(a)  may make an estimate of:

(i)  the total amount of all premiums received by the insurer for general insurance in the preceding year less the total amount of any refunds of premiums made by it in relation to general insurance in the preceding year, and

(ii)  the total amount of all premiums received by all insurers for general insurance in the preceding year less the total amount of any refunds of premiums made by those insurers in relation to general insurance in the preceding year, and

(b)  may use those estimates for the purposes of subsection (2).

(4)  If a single return for a year has been lodged on behalf of two or more insurers who are related bodies corporate within the meaning of the Commonwealth Corporations Act 2001, the liability of those insurers to pay the tax imposed by this Act for the year is to be assessed as if those insurers were a single insurer.

(5)  Insurers who are assessed for tax in accordance with subsection (4) are jointly and severally liable for the tax.

9   Premiums

(1)  For the purposes of this Act, 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)  For the purposes of this Act, premium:

(a)  includes a fire service levy and emergency service levy paid or payable in connection with insurance by an insurer or any other person, and

(b)  does not include:

(i)  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

(ii)  an amount of duty under the Duties Act 1997 or an Act of another Australian jurisdiction that corresponds to the Duties Act 1997.

(3)  It is immaterial where the amount is paid or received or where the insurance is effected.

10   Receipt and refund of premiums

(1)  A premium, or an instalment of a premium, is received for the purposes of this Act when the first of the following events occurs:

(a)  the premium or instalment is received directly 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.

(2A)  A premium or instalment of a premium received by another person on an insurer’s behalf is taken to have been received by the insurer when the premium or instalment (or any part of the premium or instalment) is paid to the insurer or credited in the insurer’s accounts.

(3)  A premium, or an instalment of a premium, is refunded for the purposes of this Act when the first of the following events occurs:

(a)  the premium or instalment is received by the person who paid it, or

(b)  the account of the person who paid the premium or instalment is credited with the amount of the premium or instalment, or

(c)  an entry crediting the account of a person with the payment of the premium or instalment is reversed because:

(i)  the entry was made in error, or

(ii)  a cheque by which the payment purported to be made is dishonoured.

11   Reassessment of tax liability of insurers

(1)  The Chief Commissioner must, on or after 15 March and before 15 May in each year, make a reassessment of the liability of each insurer to pay the tax imposed by this Act for that year in accordance with section 8 (2), subject to this section.

(2)  If the amount of the liability of an insurer for a year differs from the amount specified in the notice of assessment issued to the insurer for the year under section 8 (1) (b), the Chief Commissioner must issue a final notice of assessment adjusting, if necessary, the instalment of tax for the year that is payable by 15 June.

(3)  If, at any time before issuing the final notice of assessment for a year, the Chief Commissioner is satisfied that an insurer is unable to pay the full amount of the tax specified in the notice of assessment issued to the insurer for the year under section 8 (1) (b) (such an insurer being referred to in this section as the defaulting insurer), the Chief Commissioner, in making the reassessment under subsection (1), must make a reassessment of the liability of each insurer (other than the defaulting insurer) to pay the tax imposed by this Act for that year in accordance with the formula:

where:

A is the reassessed liability of the insurer to pay the tax imposed by this Act for the year, and

B is the total amount of all premiums received by the insurer for general insurance in the preceding year less the total amount of any refunds of premiums made by it in relation to general insurance in the preceding year, and

C is the total amount of all premiums received by all insurers (other than the defaulting insurer) for general insurance in the preceding year less the total amount of any refunds of premiums made by those insurers in relation to general insurance in the preceding year, and

D is the total amount of tax imposed by this Act for the year as determined in accordance with section 5 less the amount (if any) of that tax paid by the defaulting insurer.

(4)  Part 10 of the Taxation Administration Act 1996 does not apply to a reassessment made under this section.