Insurance policies are about to become more affordable for hundreds of thousands of NSW small businesses, as the state government prepares to introduce stamp duty exemptions across certain insurance products.
Approximately 677,000 organisations in the state will benefit from the changes, according to the Insurance Council of Australia (ICA). Stamp duty can add up to 9 per cent to the cost of premiums – a considerable expense for many businesses.
But which firms can take advantage of the exemptions? And what products are subject to the changes? Let’s take a look at the reforms in more detail.
Who will benefit?
The exemptions come into force on January 1 2018 and will impact organisations that earn less than $2 million per year in revenue.
These businesses will not have to pay duty on:
- Commercial vehicle insurance;
- Product and public liability insurance;
- Commercial aviation insurance; and
- Occupational indemnity insurance.
Furthermore, crop and livestock insurance will no longer be liable to duty. The exemptions across all products relate to both new policies and renewals.
“Taxes on insurance are not only regressive and inefficient, they contribute to underinsurance and non-insurance by discouraging business owners and households from buying sufficient cover for their needs,” said ICA CEO Rob Whelan earlier this year.
“For some small businesses, insurance stamp duties add thousands of dollars to their expenses each year.”
Am I eligible for an exemption?
Small businesses that meet the above criteria should be eligible for a stamp duty exemption across the listed insurance products.
“Using a broker saves you cash up front, but in the event of a claim or some sort of an issue, they do the work – instead of you.”
Nevertheless, business insurance can be complex and organisations could face a penalty of up to $11,000 for a false declaration. Firms may also have to pay their insurer a sum equal to the duty plus any interest or penalty taxes if they are later found ineligible for an exemption.
Allied Business Accountants Director David McKellar discussed the upcoming exemptions in June. He claimed that small businesses should seek help from insurance brokers if they are unsure about the changes.
“Using a broker saves you cash up front, but in the event of a claim or some sort of an issue, they do the work – instead of you,” he told SmartCompany.
Insurance brokers will be responsible for claiming stamp duty exemptions on behalf of their clients, and we will ensure your new or renewed policy takes into account any new reforms to existing rules.
Would you like to discuss how stamp duty exemptions could affect your small business? Please contact MGA Insurance Brokers for more information today.