When the NSW Insurance Duty Exemption Applies
The NSW small business stamp duty exemption removes insurance duty from four kinds of business insurance when the insured is a CGT (capital gains tax) small business. For a brokerage, that usually covers professional indemnity and public liability, while office contents and household cover stay dutiable.
Revenue NSW’s small business exemption guidance lists the exempt types:
- commercial vehicle insurance
- commercial aviation insurance
- occupational indemnity insurance, which includes a broker’s professional indemnity cover
- product and public liability insurance
The insured qualifies when it carries on a business and its aggregated turnover is under $2 million for both the previous income year and the likely current income year. Aggregated turnover is the business’s Australia-wide turnover plus the turnover of any affiliate or connected entity. A brokerage company controlled by the same owner as another business must add that business’s turnover.
Insurance duty is a different tax from the duty paid on a property purchase. It is charged on insurance premiums. The insurer pays it to Revenue NSW and usually passes it on in the premium. Transfer duty, the stamp duty most clients know, applies when someone buys or receives property. Qualifying as a small business for insurance duty says nothing about any transfer duty concession, which has its own rules and its own test.
Identify the Eligible Cover on Your Policy
Match the insured entity, the business activity and each policy section to the exempt types before you assume any premium is duty-free. A business insurance package often bundles exempt and dutiable cover. Revenue NSW requires the insurer to split the premium between the types of insurance and charge duty only on the dutiable parts.
Start with the insured named on the schedule. The exemption applies to the insured person, so the entity on the policy must be the entity that meets the turnover test. If the policy names the brokerage company but the turnover figures belong to the owner’s trust, resolve that mismatch first.
Then read each section of the policy against the exempt types:
| Policy section | Exempt type it matches | Treatment for a CGT small business |
|---|---|---|
| Professional indemnity | Occupational indemnity insurance | Exempt |
| Public liability | Product and public liability insurance | Exempt |
| Car used mainly for the business | Commercial vehicle insurance | Exempt |
| Office contents and business interruption | None | Dutiable |
| Home and contents | None | Dutiable |
Revenue NSW defines occupational indemnity as cover for liability from providing professional or other services. Product and public liability covers personal injury or property damage connected with the business or its products and services. A section that covers neither, such as office contents, stays dutiable even inside an exempt package.
Household insurance is a separate question. Revenue NSW classes car, home and contents insurance as general insurance, and the exempt list includes no household cover. A brokerage owner’s home and contents policy stays dutiable, even when the brokerage itself qualifies. A home-based brokerage with business cover attached to a home policy needs the insurer’s wording for each section. Read the policy schedule and the Revenue NSW types of insurance before you treat any part of it as exempt.
Complete the Brokerage’s Insurance Declaration
To claim the exemption, the insured must declare to the insurer that it is a small business, in a form the insurer accepts. The insurer decides whether the exemption applies, and without a declaration it charges duty.
Gather the evidence before you read the declaration:
- Get the previous income year’s turnover from the brokerage’s tax return or financial statements.
- Estimate the current year’s turnover from commission received so far and the expected pipeline.
- List every affiliate and connected entity, such as another business the same owner controls, and add its turnover.
- Confirm that the insured on the policy is the entity those figures describe.
Commission is usually most of a brokerage’s turnover. Track My Trail’s Quick Analysis shows an annual income projection from the brokerage’s trail reports, which gives a starting figure for the current-year estimate. Add upfront commission and any other business income before comparing the total with the $2 million threshold.
Read the insurer’s declaration wording in full before you confirm it. Revenue NSW accepts a written declaration, an email, a recorded phone declaration or an electronic check box at application or renewal. The exact form belongs to the insurer. Allianz’s NSW stamp duty exemption page, for example, takes the declaration by phone before the premium is paid and through a declaration form after payment.
The declaration must come from the insured. Revenue NSW says agents and insurance brokers cannot complete it on the insured’s behalf, although an insurance broker can hold the signed declaration for the insurer. A declaration lasts for the financial year, and Revenue NSW expects one for each policy renewal. A declaration given directly to an insurer covers that insurer’s policies. Revenue NSW’s practice note treats one given to an insurance broker as effective across all insurers for that income year.
Keep a record with the policy documents that shows:
- who made the declaration, and their role in the insured entity
- the insured entity and the policies and sections it covers
- the turnover figures and affiliate list that support it
- the date it was given and where the brokerage stores the signed copy
A false or misleading declaration carries a maximum penalty of $11,000, and the insurer can recover the duty with interest or penalty tax.
Check the Premium and Correct an Error
Read the premium document line by line to find the duty charged. The invoice or schedule usually shows the base premium, GST and stamp duty as separate amounts. Where it itemises each section, an exempt section shows no stamp duty and a dutiable section still carries it.
Confirm with the insurer which sections received the exemption. Ask for the answer in writing if the invoice shows one duty figure for the whole package, because a single line does not show how the premium was split.
When duty appears on a section that should be exempt, check first whether the insurer received a declaration for that policy and year. If none was given, make the declaration through the insurer’s process. If one was given, send the insurer a copy and ask it to correct the invoice.
Ask the insurer how it handles a declaration made after the premium was paid before you count on a refund. Revenue NSW says a CGT small business charged duty on exempt insurance is entitled to a refund, for policies issued or renewed since the exemption began in 2018. Each insurer sets its own refund steps. Allianz, for example, says it may not be able to recover duty already paid. The insurer, not the brokerage, applies to Revenue NSW for the refund.
For an indicative figure before the insurer replies, the insurance stamp duty calculator estimates the duty for a premium and policy type.
Review Eligibility When the Business Changes
Recheck the evidence and the declaration whenever one of these changes:
- the policy renews, because each financial year needs a current declaration
- the insured entity changes, such as a move from sole trader to company or a new trust structure
- turnover grows towards the $2 million threshold, including turnover from a newly connected business
- the brokerage adds a new activity, such as a second business that changes what the policy insures
A Hypothetical Brokerage Renewal
In this fictional example, a brokerage company receives a renewal for a package with professional indemnity, public liability, office contents and a cyber section. Its turnover was $1.4 million last income year, and the owner expects $1.6 million this year. The owner’s other business, a small property management company the owner controls, adds $150,000 a year.
Aggregated turnover is $1.55 million for the previous year and $1.75 million expected this year, so the company is a CGT small business. The owner makes the insurer’s written declaration in the company’s name and files it with the turnover workings.
The professional indemnity and public liability sections are exempt, and the office contents section stays dutiable. The cyber section is unresolved, because its wording mixes data-breach costs with third-party liability. The owner asks the insurer in writing which part of the cyber premium carries duty.
The insurer replies that the cyber section is dutiable in full. The owner files that reply with the declaration, the renewal invoice and the turnover figures. At the next renewal, the same file shows what was declared and why. For the wider cover decisions, the mortgage broker insurance guide covers the brokerage’s full insurance review. The guide to professional indemnity insurance for mortgage brokers covers PI wording and limits.
