The Western Australian Government has announced plans to amend its tax laws so that stamp duty is not payable on international travel and other insurance policies involving risk outside Australia.
The decision is a big win for the insurance industry, which has been lobbying the Government over a ruling it believed was out of line with interstate practice.
The issue stemmed from audit activity by the Office of State Revenue on six travel insurers in WA.
The audit found the insurers were either not paying stamp duty or were applying stamp duty in several different ways, prompting the disputed ruling by the Commissioner of State Revenue.
Treasurer Eric Ripper said: “the current law requires stamp duty to be applied to the total premium paid, including that part of the premium related to risk outside of Australia.
“It is an unintended consequence of the legislation that has the potential to drive up costs.
“It is also out of step with other States and Territories.”
Mr Ripper said the provisions to be amended had not been updated since 1979.
Any stamp duty overpaid since July 1 1997 as a result of the anomaly would be refunded, subject to certain conditions.
Ernst & Young partner Scott Grimley said the Government decision would have a far wider impact than on travel insurance.
It would affect any insurer or company with a policy over property in WA and the rest of the world.
“Our position was that there were some significant technical difficulties with the position taken by the Office of State Revenue,” Mr Grimley said.
HBF Insurance has cautiously welcomed the government announcement.
Managing director Ivor James said it appeared the legislation would mean Western Australian travellers, like travellers in other States, would only pay stamp duty on the domestic component of their travel insurance policies.
Mr James said HBF now expected to receive a Government refund of almost $3 million.
“This will avoid an increase in premiums that would have been necessary to meet the cost of the retrospective stamp duty,” he said.
“The Government is to be applauded for its willingness to act in the best interests of our members and the travelling public in WA.”
Mr Ripper said the amendment would be followed by a major rewrite of the 83-year-old Stamp Act as part of the government’s business tax changes.
