From the first of August 2013 the stamp duty charged on insurance by the Queensland Government will be increasing.
These changes were announced as part of the 2013-14 budget handed down by the Treasurer earlier this month.
Previously most business insurance policies, including public liability insurance, attracted stamp duty of 7.5%.
Other forms of insurance, including professional indemnity insurance, attracted stamp duty of just 5.0%.
With the changes coming in August this year, all forms of insurance (with the exception of CTP) will be charged stamp duty of a rate of 9.0% including GST.
As far as business insurance goes, the changes represent a 20% increase for public liability and a whopping 80% increase for professional indemnity.
Although this seems like a fairly hefty increase, a letter issued to businesses by the Office of State Revenue was quick to point out that the new rates are equal to those charged in NSW and lower than those charged in all other states.
It is certainly a kick in the guts for Qld small businesses, and there is a risk that it will lead to more businesses choosing to operate with either no insurance or inadequate insurance.
In reality the increase in dollar terms will be fairly minor, but in small business every single dollar counts.
New Stamp Duty Rates
The insurance stamp duty rates from 1 August 2013 are as follows:
- Class 1 General Insurance – 9.0%
- Class 2 General Insurance – 9.0%
- Compulsory Third Party Insurance – 10c per policy
Note: Insurance stamp duty is charged as a percentage of the premium paid and includes GST.
Previous Stamp Duty Rates
The insurance stamp duty rates prior to 1 August 2013 were as follows:
- Class 1 General Insurance – 7.5%
- Class 2 General Insurance – 5.0%
- Compulsory Third Party Insurance – 10c per policy
What’s the Difference Between Class 1 and Class 2?
This question is somewhat irrelevant now since class 1 and class 2 general insurance are both charged stamp duty at the same rate, but here is the answer anyway:
Class 1 – All general insurance types other than class 2 general insurance and CTP insurance.
Class 2 – All general insurance types relating to the following:
- Professional indemnity insurance
- Personal injury insurance relating to aircraft travel
- Motor vehicle insurance other than CTP
- Home mortgage that is a first mortgage
- Life insurance riders
More Information
For more information about the Qld stamp duty changes and how they affect your business insurance please contact the Office of State Revenue or your insurance broker.