The latest ACT Budget has slashed insurance tax by half and cemented the intention to completely abolish tax on insurance products from 1 June next year.
Tax has been cut on all premiums, including motor vehicle, building and contents, and professional indemnity, from 4% to 2%, while life insurance has been cut from 2% to 1%.
The ACT’s declining rates compare well against other states and territories, with insurance tax ranging from 9% to 11% across NSW, Queensland, Victoria and South Australia.
Being a strong advocate for insurance cuts right across Australia, NIBA CEO Dallas Booth has voiced praise over the ACT’s continued cuts.
“NIBA strongly commends the ACT Government for the actions taken in recent years to reduce and ultimately remove taxes on insurance policies,” Booth says.
“NIBA has always opposed the double taxation of insurance policies across Australia. It is an anachronism that NSW property owners pay three taxes and levies on their property insurance policies, increasing the cost of insurance by over 50% in some cases.”
“Every independent review of insurance taxes – from the HIH Royal Commission through to the recent Financial System Inquiry – have all recommended the removal of these taxes,” Booth adds.
“The ACT Government is to be congratulated for taking steps to phase out the unfair taxes on insurance.”
Complete abolition of insurance tax in 2016 will result in savings of 10% on insurance for households and businesses in the ACT.
The ACT Government has also continued to lower stamp duty taxes on property, with Canberrans saving thousands when buying households.