NSW Stamp Duty Exemption for Small Businesses
The NSW Government legislated for small businesses (with an annual aggregated turnover of $2 million or less) to be exempt from paying NSW stamp duty on certain types of insurance effected on or after 1 January 2018.
These include:
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Commercial vehicle insurance – for a motor vehicle used primarily for business purposes
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Occupational indemnity insurance (or professional indemnity) – covering liability arising out of the provision of professional or other services (other than medical indemnity insurance). This does not apply to Medical Malpractice Policy and only the D&O component of the Management Liability policy is exempt, therefore 1% of the stamp duty charges is exempt.
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Public and product liability insurance – covering liability for personal injury or property damage occurring in connection with, or arising out of the products or services of, a business.
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 to the effect that the person is a small business at the time that the contract of insurance is effected or renewed. A single small business declaration will cover all insurance effected with a particular insurer during the small business’s income year.
What if I have affiliates to my business or I am connected with more than one business?
You will need to aggregate the annual turnover of any business entities that are either your affiliates or are connected with you.
What if I took out the insurance before 1 January 2018, can I receive a refund?
No. The exemption only applies to insurance policies effected or renewed on or after 1 January 2018.
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 policy is effected or renewed on or after 1 January 2018. However, 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.
Can I get a refund of duty if I am an insured business and my aggregate turnover reduces so that I fall within the small business definition during the policy period (e.g. mid-term)?
No. Eligibility is determined at the time the policy is effected or renewed.
What happens if I claim a small business exemption I am not entitled to?
A court may impose a penalty of up to $11,000 for an individual and $55,000 for a corporation. In addition, 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.