FAQs about the NSW Insurance Duty Exemption for Small Businesses

What are these FAQs all about?

If you’re a NSW small business, you might qualify for an exemption from paying stamp duty on your insurance.

Stamp duty is something every premium for any general insurance covering a risk or property in NSW attracts that we pay to the New South Wales Office of State Revenue (Revenue NSW). It differs from Goods and Services Tax (GST) and the Emergency Services Levy (ESL).

To help you understand whether or not you’re eligible, and how the exemption works, we’ve put together these FAQs to answer some of the questions that get thrown our way regularly. Just remember, this is information that was valid as at the date it was published and does not constitute nor replace independent financial, legal or taxation advice.

If you want to hear about these changes straight from the source, check Revenue NSW’s website.

What is the NSW small business exemption?

From 1 January 2018, NSW small businesses will be exempt from paying stamp duty on certain types of insurance.

What is a small business?

Revenue NSW has stated “you are a small business if you are an individual, partnership, company or trust that is carrying on a business, and the business has an aggregated turnover of less than $2 million. Aggregated turnover is your annual turnover plus the annual turnovers of any business entities that are your affiliates or are connected with you.”

If you are uncertain whether you classify as a small business, please speak to your financial adviser. Revenue NSW may also be able to clarify your queries relating to the law and your obligations.

Which insurance types will the exemption apply to?

The exemption can be applied for NSW small businesses with Small Business Insurance, or commercial Car, Motorcycle or Caravan & Trailer policies.

What is commercial Car, Motorcycle or Caravan & Trailer insurance?

Commercial insurance is where the Car, Motorcycle or Caravan & Trailer is used primarily for business purposes. A vehicle that is shown as business use on its certificate of registration is used primarily for business purposes. If your vehicle registration is private, then for the vehicle to be classified as being used primarily for business purposes, more than 50% of the total kilometres travelled in the year must be for business purposes. Your vehicle must then be specified as “business use” on your Youi policy.

What about optional covers with Youi?

If you have selected any options under your Small Business Insurance policy such as Business Property Damage (which includes Stock in Trade, Money or Business Items), a 9% stamp duty will continue to apply to the premiums charged for those options.

If you have selected optional covers, such as Campervan/Motorhome Contents or Business Items for any vehicle insurance policies, stamp duty will continue to apply to the additional premiums charged for this cover.

How much is NSW stamp duty?

For Small Business Insurance premiums, the duty payable is 9% of the premium inclusive of GST.

Car, Motorcycle and Caravan & Trailer premiums attract a duty of 5% of the premium inclusive of GST and ESL.

What if I change vehicles?

If you are a small business and have made the declaration at the start of the current income year, the exemption will apply to your new commercial vehicle.

If you cease using your vehicle in your business, then the exemption will not apply to the remainder of the term.

If you are no longer in NSW, duty will be governed by the laws of the state in which you operate your business or garage your vehicle.

Please ensure you advise us of any changes during the term of your insurance that may affect the insurance risk or the exemption.

What if I’m not sure if I’m a small business?

You are a small business for the purpose of the Duties Act 1997 (NSW) if you are a CGT small business entity within the meaning of section 152-10(1AA) of the Income Tax Assessment Act 1997 (Cth). As mentioned above, generally, if you are carrying on a business which had, or is likely to have, an aggregated turnover of less than $2 million, you could meet the definition prescribed by the legislation. Aggregated turnover is your annual turnover plus the annual turnovers of any business entities that are your affiliates or are connected with you. If you are not sure, we recommend you seek independent financial advice.

Still a bit confused, or maybe you want to know more?

We recommend you seek independent financial and taxation advice and also suggest you visit Revenue NSW’s website.