Broadly, insurance duty is imposed on life insurance and general insurance. For life insurance, insurance duty is imposed in the jurisdiction where the insured person resides at the time the policy is effected. For general insurance, insurance duty is imposed in the jurisdiction where the property or risk insured is located. Some of the highest rates of stamp duty are applicable to policies of general insurance (for example, 11 per cent of the premium in South Australia). Generally, insurance duty is imposed on the insurer although the insured may be liable in certain situations.
Issues have arisen in practice for corporate groups that insure under a global insurance policy that includes property or risk in Australia. In these circumstances, the insured may be liable for the insurance duty.
The PwC Stamp Duty team has assisted multi-national corporate groups in determining whether there is a liability for insurance duty on a global insurance policy. In such cases, it is necessary to review the policy and understand the nature of the insurance in order to identify whether there is any nexus or connection with an Australian jurisdiction so that a liability arises. In many cases, the requisite nexus has been absent so that a liability does not arise.
