Victorian stamp duty update

An issue has arisen as to whether insurance policies for property in Victoria placed with overseas insurers are liable to stamp duty in the state.

NIBA CEO, Dallas Booth said, “Our understanding is that these policies are liable for stamp duty, but apparently there are other views on the matter. Our legal adviser has prepared a background note for the information of brokers and we have raised the matter with the Victorian State Revenue Office.

“We will provide further information on this issue once the Victorian SRO has responded to our request for clarification.”

NIBA understands that some law firms have written to insureds advising that they may be entitled to a stamp duty refund under the Victorian Duties Act 2000 in relation to insurance arranged with an unauthorised foreign insurers (UFIs). This arises from the issues raised in Chief Commissioner of State Revenue v Qantas Airways Ltd [2009] NSWCA 163 (Qantas).

The relevant provisions in the NSW Act were found by the Court to only operate where there was an “insurer” as defined in the NSW Act. That definition only applied to insurers registered under the Insurance Act or LI Act.

The end result was that as UFIs were not insurers registered under the Insurance Act or LI Act, they did not fall within this definition of insurer and duty did not apply to insurance issued by them to insured persons. The NSW section has since been amended to address the issue.

NIBA had understood that the approach of the Victorian Stamp Duties Office was that duty applies to UFI business via Section 181 of the Victorian Act. NIBA has sought confirmation on its current position in this regard given the above issue has been raised.

NIBA is not clear on the arguments being put forward, nor whether they are likely to succeed. However, based on the Qantas logic, the argument may be that use of the term insurer in section 181 (on the same logic as Qantas) only catches an insurer as defined in the Victorian Act that is one that writes insurance (not in the capacity of an insurance intermediary as defined in the Victorian Act) that is either:

  • authorised under the Insurance Act to carry on insurance business; or
  • registered under the LI Act.

If an insurer is exempt from authorisation under the Insurance Act e.g. an offshore insurer relying on one of the insurance business exemptions in section 3A, they would not be caught by the above insurer definition. The same applies for life insurers not registered under the LI Act.

As noted above, NIBA has sought clarification from the Victorian Stamp Duties Office on its current view and approach.

In relation to future payments of duties relating to UFI business, the payment obligation is on the insured person. Insurance brokers should be careful to make it clear to any insureds choosing not to pay, that any such decision should only be made after seeking appropriate legal advice and is made at the risk of the client.

NIBA will advise of any response receive from the Victorian Stamp Duties Office.