Insurance duty exemptions
You may be able to claim an exemption from insurance duty for:
- marine insurance
- goods in transit insurance
- health insurance
- charitable institutions
- public liability insurance for community organisations.
There are no specific exemptions available for:
- WorkCover premiums
- seniors and pensioners.
If you have been invoiced for insurance duty on premiums that you believe are exempt, you can discuss your exemption eligibility with your insurer or broker.
Marine insurance exemption
You do not have to pay duty on insurance for the physical loss or damage to the hull of a boat used mainly for commercial purposes.
This exemption does not cover liability for third-party damage or for non-physical loss, such as loss of the crew's wages. If your policy covers non-exempt risks such as these, the premium will have to be apportioned in order to apply the exemption correctly.
It is understood there is an industry practice that insurers using the Institute Time Clauses apportion:
- 5% of the premium to clause 8
- 3% of the premium to clause 16.
Goods in transit insurance exemption
Insurance duty is not paid on a contract of insurance for the physical loss or damage to goods in transit, or for the loss of freight goods in transit.
Health insurance exemption
You do not have to pay insurance duty on a contract of insurance that provides hospital or medical benefits if the contract is issued by a private health insurer under the Private Health Insurance Act 2007 (Cwlth).
Insurance duty is not paid on a contract for the reinsurance between one insurer and another insurer.
Charitable institution exemption
You will not pay duty on a premium for general insurance for property or an undertaking of a charitable institution if the insured property is used mainly for one of the following qualifying exempt purposes:
- to conduct religious or educational activities (including kindergartens)
- to care for the sick, aged, infirm, afflicted or incorrigible persons
- to relieve poverty
- to provide full-time care for children by protecting their wellbeing and giving them food, clothing and shelter
- to conduct another charitable or public benevolent purpose
- to provide residence to a minister or members of a religious order conducting a previously listed activity.
Insurance on property that forms part of an employment or salary package for an employee of a charitable institution is not exempt from duty.
A full definition can be found in section 415 of the Duties Act 2001.
There are 2 steps to receiving an exemption:
- Apply to register as a charitable institution.
- Claim the exemption.
To claim the exemption, you need to provide your insurer with a:
- copy of your notice or letter of registration as a charitable institution
- 'qualifying use' statement, indicating the purpose for which the insured property will be used, signed by an authorised representative of the registered charitable institution.
A qualifying use statement will have been sent to you with your letter of registration as a charitable institution.
For more information, phone the Office of State Revenue on 1300 300 734.
Community organisations - public liability insurance exemption
Public liability insurance covers you or your organisation against legal liability to pay compensation or damages to a third party arising from some act or omission.
An exemption applies to public liability insurance taken out by a non-profit community organisation for a risk relating to the organisation's community purpose activities, such as:
- public liability insurance cover
- product liability insurance, including legal liability connected with goods or their containers sold or supplied by the insured
- insurance for directors' and officers' liabilities, including legal liability connected with the performance of these roles for the insured.
The exemption does not apply to professional indemnity insurance, which covers legal liability connected with a breach of the insured person's professional duty.
Your organisation can claim a public liability insurance duty exemption if:
- it is an incorporated or unincorporated grassroots community non-profit organisation that
- does not operate for the profit or gain of its members
- uses its income and property solely for its principal community purpose and not for distribution to its members
- has rules that state that if the organisation is disbanded, any surplus assets are to be transferred to another community non-profit organisation, or applied to a charitable purpose
- it has an organisational and administrative structure and controls its own affairs (trusts are not exempt)
- membership is open to the public
- members give their time voluntarily
- it is formed, and carried on, mainly for a lawful community purpose.
See the table below for a list of lawful community purposes. If your organisation's purpose is not included here but has a similar purpose, you can apply for the exemption and we will review your circumstances.
|Category||Type of organisation|
|Arts and culture|
|Environment and conservation|
|Community, family and youth|
|Heritage and historical|
|Sporting and recreation|
Your organisation cannot claim the exemption if it falls under any of the following categories:
- public sector
- statutory bodies
- commercial and business organisations, bodies, authorities or trusts
- political or union organisations
- organisations controlled or appointed by, or representing or promoting, business or government sectors
- organisations that are registered or entitled to be registered as charitable institutions under Part 11A of the Taxation Administration Act 2001 and are already eligible for the exemption on public liability insurance
- non-profit community organisations with significant business or commercial activities and interests. These are organisations that
- hold a statutory licence to conduct a commercial activity (excluding a category 3 game licence, bingo centre licence, general purpose permit liquor licence, restricted club permit liquor licence or local authority approval of premises for food preparation and sale or to hold a special event)
- charge for services, participation in activities or attendance at events or offer prize money (other than membership fees, fund-raising activities or activities in pursuit of their main objectives)
- have assets with a gross value (i.e. before liabilities) of more than $1 million or gross revenue (i.e. before expenses) of more than $500,000 for a financial year.
If your organisation does not pass either of the financial tests because it operates on a state, national or affiliated basis, you may apply to us for a review of your circumstances to determine if your organisation has a significant business or commercial focus.
When calculating gross revenue, you can disregard:
- revenue from fund-raising activities if they are not the organisation's main pursuit (e.g. raffles or street stalls held by amateur sporting clubs)
- government grants for community purposes.
Applying for exempt status
To apply for exempt status, you must:
- complete a Not-for-profit community organisation insurance duty exemption (Form D8.3)
- provide a copy of your organisation's constitution or rules.
If approved, we will send you an approval letter. You will need to give this to your insurer to claim the exemption. Your insurer will need to sight this letter in order to apply the exemption to your policy.
To be eligible for the exemption, the insurance cover must be provided either:
- under a stand-alone policy (i.e. it provides public liability cover only)
- as part of an insurance package (i.e. the policy covers risks in addition to public liability)
- under a master policy relating to a group scheme.
The premium for the exempt public liability insurance must be identified separately, on the premium invoice, for the exemption to apply. A partial exemption may apply to insurance packages or group scheme master policies that include public liability cover.