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Note number | CPN 002 |
Tax/benefit | Duties |
Type | Insurance |
Date issued | 18 December 2017 |
Issued by | Cullen Smythe Commissioner of State Revenue |
Effective from | 01 January 2018 |
Effective to | - |
Status | Current |
This Commissioner’s practice note deals with a part of the exemption from insurance duty for a small business and reflects the Commissioner’s position in relation to this type of insurance.
Section 259B of the Duties Act 1997 (‘the Act’) provides an exemption from general insurance duty for certain small businesses1. The exemption extends to occupational indemnity insurance, being insurance covering liability arising out of the provision by a person of professional services or other services (other than insurance providing medical indemnity cover within the meaning of the Medical Indemnity Act 2002 of the Commonwealth (‘MI Act’)).
Questions have been asked on what is medical indemnity cover within the meaning of the MI Act.
The MI Act defines ‘medical indemnity cover’ as a contract of insurance that provides medical indemnity cover for a person if:
A single contract of insurance may provide medical indemnity cover for more than one person.
Any occupational indemnity insurance supplied to a person practicing a health profession listed above is viewed by the Chief Commissioner as medical indemnity cover and is not exempt under section 259B of the Act.
While a policy taken out by a small business covering medical indemnity cover is not exempt, if it also provides other cover (eg: public liability), then that other component may still be exempt under the small business exemption. If a policy provides cover for a combination of risks (Type A or Type B insurance5 and exempt insurance6), the premium will need to be apportioned by the insurer under the provisions of section 258 of the Act.