Do you remember the “Berejiklian Back Flip” of May 2017? It was spectacular.
The backflip, performed two months out from implementation undid at least 12 months’ work in preparing to abolish the unfair & inefficient Emergency and Fire Services Levy (E&FSL) applied to some insurance purchases.
So it’s still applies for the foreseeable future.
As reminder, the E&FSL adds at least 30% to the cost of insurance, leading to under insurance and leaving the burden of funding our wonderful emergency services organisations to those that insure, rather than spreading the burden across a broader base.
Well the NSW Stamp Duty Exemption for Small Business is more of a “forward roll”, not at all spectacular but at least it’s a move the right direction.
Don’t get too excited though as it’s only around 9% (at the upper end) and only applies to types of insurance that are generally the least costly for a small business. It’s better than nothing though so read on…
Here are the details:-
As the name suggests, you need to be a small business, here is the definition:
A small business is an entity within the meaning of section 152-10 (1AA) of the Income Tax Assessment Act 1997 of the Commonwealth for the income year in which the insurance is effected or renewed. At present, you are a small business entity if you are an individual, partnership, company or trust that:
• is carrying on a business, and
• 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.
What types of insurance are impacted?
The exemption will only apply to the following types of insurance:
• Commercial vehicle insurance – being motor vehicle insurance for a vehicle used primarily for business purposes
• Commercial aviation insurance – being aviation insurance for an aircraft used primarily for business purposes
• Occupational indemnity insurance – insurance covering liability arising out of the provision by a person of professional services or other services (other than medical indemnity cover within the meaning of the Medical Indemnity Act 2002 of the Commonwealth)
• Product and public liability insurance – insurance covering liability for personal injury of property damage occurring in connection with a business or arising out of the products or services of a business.
For a policy to be exempt, the insured must be a small business as at the date the policy is effected or renewed and the insurer must have a small business declaration. If an insurer does not have a small business declaration as at the date the policy is effected or renewed then the policy is liable to duty.
What is a small business Declaration?
You will receive a 1 page declaration from the insurer directly or from your advisor (if you have one).
Where a small business declaration has not been provided at the time the policy is effected or renewed the policy will be liable to duty.
If you are unsure, seek advice from your accountant and get organised well before your polices are due renew so that you can get the declaration completed in time.
A false declaration may result in a maximum penalty of $11,000 plus other costs being imposed.
Fraudulent declarations may affect the insured’s rights under the insurance policy.
Your Chamber will continue to encourage governments at all levels to cut red tape and reduce the costs associated with running a small business.