Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2004 - 2006
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
GENERAL INSURANCE SUPERVISORY LEVY IMPOSITION
AMENDMENT BILL 2006
EXPLANATORY MEMORANDUM
Circulated by the authority of the Minister for Revenue and Assistant Treasurer,
The Hon Peter Dutton, MP
Table of Contents
OUTLINE ..............................................................................................................1
FINANCIAL IMPACT STATEMENT ........................................................................2
NOTES ON INDIVIDUAL CLAUSES .........................................................................2
SCHEDULE 1 AMENDMENTS TO THE GENERAL INSURANCE
SUPERVISORY LEVY IMPOSITION ACT 1998.......................................................3
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General Insurance Supervisory Levy Imposition Amendment Bill 2006
1
Outline
1.1 The purpose of the General Insurance Supervisory Levy Imposition
Amendment Bill 2006 (the Bill) is to enable a special levy component to be
imposed on a class of general insurance company regulated by the Australian
Prudential Regulation Authority (APRA).
1.2 The Bill will amend the General Insurance Supervisory Levy Imposition
Act 1998 to allow for the Treasurer to determine the special levy component to
be imposed on a class of general insurance company.
1.3 The measures contained in the Bill are designed to provide for increased
flexibility in the recovery of costs incurred by APRA. The Bill provides that
costs incurred by APRA in performing an activity relating to a class of general
insurance company are not necessarily recovered from all general insurance
companies. For example, the Bill will enable costs associated with the National
Claims and Policies Database (NCPD) to be recovered only from those general
insurance companies which contribute to, and thereby can benefit from, the
NCPD rather than all general insurance companies. A class of general
insurance company can be determined by the classes of business written by the
general insurance company.
1
General Insurance Supervisory Levy Imposition Amendment Bill 2006
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Financial Impact Statement
1.1 It is not envisaged that the Bill will have a financial impact on the
Government. The Bill provides the legislative scope for the determination of a
special levy component for a class of general insurance company. This levy
will be determined in accordance with the process followed for the application
of all financial sector levies.
1.2 Regulated general insurance companies will continue to pay existing levies
which are used to fund the operations of APRA as well as certain related
activities undertaken by the Australian Securities and Investments Commission
and the Australian Taxation Office.
1
Notes on individual clauses
Clause 1 Short title
1.1 Clause 1 is a short title specifying the Short Title of the Bill.
Clause 2 Commencement
1.2 Clause 2 indicates that the Bill will commence the day after Royal Assent.
Clause 3 Schedule
1.3 Clause 3 indicates that each Act that is specified in a Schedule to this Act is
amended or repealed as set out in the applicable items in the Schedule
2 General Insurance Supervisory Levy Imposition Amendment Bill 2006
concerned, and any other item in a Schedule to this Act has effect according to
its terms.
1
Schedule 1 Amendments of the General
Insurance Supervisory Levy Imposition Act 1998
Item 1
1.1 Item 1 defines the special statutory upper limit as $500,000 in relation to
the financial year commencing on 1 July 2006. In later years the special
statutory upper limit will be calculated by multiplying the relevant special
statutory upper limit and the relevant indexation factor calculated under
section 9 in the existing legislation.
Item 2
1.2 Item 2 specifies that the levy payable each financial year by a general
insurance company comprises both a general component (the existing levy) and
the special component.
Item 3
1.3 Item 3 distinguishes the general component from the total levy payable.
Item 4
1.4 Item 4 distinguishes the general component from the total levy payable.
Item 5
1.5 Item 5 inserts the provisions for a special levy component. It specifies
whether the special component is payable and provides for minimum and
General Insurance Supervisory Levy Imposition Amendment Bill 2006 3
maximum special levy amounts. Item 5 also contains the operative provisions
for circumstances in which the special levy component is not payable by a
general insurance company. A special component is only payable by a general
insurance company if it has eligible premium income as defined in the
Treasurer's determination.
Item 6
1.6 Item 6 clarifies that the Treasurer's determination is a legislative
instrument.
Item 7
1.7 Item 7 provides that the Treasurer's determination will specify how a
general insurance company's eligible premium income is to be worked out in
order to calculate the amount of the special levy component payable by a
general insurance company. Item 7 also notes that the determination will
specify the special minimum levy amount, the special maximum levy amount
and the special levy percentage for each financial year.
Item 8
1.8 Item 8 provides that the special maximum levy amount must not exceed the
special statutory upper limit.
Item 9
1.9 Item 9 repeals subsection 8(6) in the existing legislation. It also provides
that the Treasurer's determination is to work out the special levy component
from a general insurance company's eligible premium income. This will
include, but is not limited to, describing the part of the premium income that is
eligible and the period for which there is eligible premium income.
Item 10
1.10 Item 10 provides for the amendments made in this Bill to have effect on
amounts payable by regulated general insurance companies from 1 July 2006.
4 General Insurance Supervisory Levy Imposition Amendment Bill 2006
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