04 Dec NSW Stamp Duty Exemptions FAQ

Posted at 22:14h in News, SME by

Frequently Asked Questions

How would an insurer know I am a small business so I am not charged duty on my policy?

An insurer will require the insured to provide a small business declaration. This is a declaration by the insured, in writing, to the effect that the person is a small business at the time that the contract of insurance is effected or renewed.

Can the declaration be verbal?

All declarations must be captured in writing. Please refer to the NSW Small Business Stamp Duty Exemption Declaration for instructions.

What happens if I claim the small business exemption I am not entitled to?

In addition to a penalty of up to $11,000 the insured may be required by the insurer to pay to the insurer an amount equal to the duty, together with any interest or penalty tax payable. The insurer may recover this amount as a debt if the amount is not paid.

What if the policy covers multiple risks?

If the policy covers multiple types of insurance, then the premium will require apportionment between the different types in order to determine the duty payable.

Similarly, if the policy applies across multiple States or Territories then the premium will require apportionment in order to calculate any duty payable for each State or Territory. The apportionment rates may vary by insurer as they are based on each individual insurer’s assessment of the split of risks.

When should a declaration be obtained?

To qualify for the NSW small business stamp duty exemption, a declaration must be completed for new business and renewals with an effective date on or after 1 January 2018.
Ideally a declaration should be obtained prior to the policy term and must be obtained before any stamp duty exemption is applied.

What if the premium is being paid in installments?

If a policy is effected or renewed before 1 January 2018 it will remain liable to duty. It does not matter if the premium is paid before or after 1 January 2018 or if the premium is paid in installments.

What if I am a small business and my insurance policy shows I am being charged duty after 1 January 2018?

A small business is not liable to duty for certain types of Insurance where the premium is paid on or after 1 January 2018. The policy may include multiple types of insurance which may not always be clear. Duty will continue to apply to other types of insurance and this may be why you will still see duty on your policy after 1 January 2018. Contact your insurer if you require further information.

 

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