NSW Stamp Duty – Small business exemption
The NSW Government has created a new small business stamp duty exemption in the Duties Act 1997 (NSW) (the Act). This is for eligible insurance acquired on or after 1 January 2018. In order to get the benefit of the NSW Stamp Duty – Small business exemption, you must:
- be an eligible small business; and,
- provide a Declaration to your insurer in an approved form.
What types of insurance are eligible for the NSW Stamp Duty – Small business exemption?
The types of insurance that you may be eligible for include:
- Commercial vehicle insurance, for a motor vehicle that is used primarily for your business purposes.
- Occupational indemnity insurance (including professional indemnity) covering liability arising out of the provision by a person of professional services or other services (other than medical indemnity cover).
- Product and public liability insurance covering liability for personal injury or property damage occurring in connection with a business or arising out of the products or services of a business.
- Commercial aviation insurance for an aircraft that is used primarily for business purposes.
Special definitions apply to each of these insurances. Therefore we recommend you refer to section 259B of the Act for full details. Insurers will only apply the exemption where they determine the policy is affected (in whole or part).
When does the exemption apply?
The exemption only applies if the eligible insurance is in a contract effected (new business and variations) or renewed on or after the 1 January 2018.
Definition of a small business
The legislation is complex. Unfortunately your insurer is not permitted to assist you in determining if you may be eligible for the exemption. We recommend you seek professional advice to help you understand if the exemption applies to you.
The small business definition would usually capture an individual, partnership, company or trust carrying on a business where their aggregated turnover (as defined in the Act) in the relevant period is less than $2 million. There are several options to determine how the “relevant period” is defined.
Please see section 259A of the Duties Act 1997 for full details and/or seek professional advice.
How do I make the required Declaration?
The insured entity must provide a Declaration that they are eligible for the exemption at the time the relevant insurance is effected or renewed. If you want to make a Declaration, please see options below.
- Option 1: If you have not paid your premium, please contact your insurer to make the Declaration and your insurer will deduct the stamp duty from your policy.
- Option 2: If you have already paid your premium and want to make the Declaration, please contact your insurer in order to make the Declaration and your insurer will arrange a refund.
What happens if I make a false Declaration?
It is recommended you obtain appropriate professional advice and/or otherwise reasonably satisfy yourself that the Declaration is not false or misleading as:
- There is a maximum penalty of $11,000 under the Act if the Declaration is provided knowing that it is false or misleading in a material particular; and
- If the Declaration is false (whether dishonest or not) and this causes the insurer to be liable to pay a duty the insurer may require you to pay an amount equal to the duty, together with any interest or penalty tax payable.
For more information please contact your Insurance Broker, TNR or click the following
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