In order to get the exemption, the small business is required to complete a declaration in writing stating that it is a small business at the time the insurance contract is effected or renewed. The form of the small business declaration is still being discussed with the Insurance Council of Australia and the Office of State Revenue. The small business declaration needs to be provided to the business’ broker or insurer. Exactly how this will occur is still being worked out.
What policies does the exemption apply to?
The stamp duty exemption will apply to the following policies:
• Commercial vehicle insurance for motor vehicles that are used primarily (ie more than 50 per cent of the time) for business purposes
• Commercial aviation insurance for an aircraft that is used primarily for business purposes
• Occupational indemnity insurance, being insurance covering liability arising out of the provision by a person of professional services or other services, but this exemption DOES NOT APPLY to medical indemnity insurance 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.
Where an exempt policy forms part of a package of insurance cover, the usual rules for apportionment will need to be applied. Similarly, if the policy covers risks in NSW and in other States or Territories, again the usual rules of apportionment will need to be applied.
A small business that wrongly claims the small business exemption will be liable to a fine of up to $11,000 plus penalty stamp duty, interest and costs.