EXPLANATORY STATEMENT

Life Insurance Supervisory Levy Imposition Determination 2006

This determination relates to a levy imposed on friendly societies and life insurance entities by the Life Insurance Supervisory Levy Imposition Act 1998.

This determination commences on 1 July 2005 and relates to the 2006‑07 financial year.  The Life Insurance Supervisory Levy Imposition Determination 2005 is revoked upon commencement of this determination.  Consistent with section 50 of the Acts Interpretation Act 1901, any obligation or liability incurred in previous financial years remains valid.

Subsection 7(3) of the Life Insurance Supervisory Levy Imposition Act 1998 allows the Treasurer to determine:

(a)           the maximum restricted levy amount for each financial year;

(b)          the minimum restricted levy amount for each financial year;

(c)           the restricted levy percentage for each financial year;

(ca) the unrestricted levy percentage for each financial year; and

(d)          how a life insurance company’s asset value is to be calculated.

This determination provides that the restricted component of the 2006‑07 levy will be calculated at 0.00540 per cent of assets held by the entity, subject to a minimum of $470 and a maximum of $700 000.  The unrestricted component of the 2006-07 levy will be calculated at 0.000981 per cent of assets held by the entity.

The finance sector has been consulted on the 2006‑07 supervisory levies through a Treasury and Australian Prudential Regulation Authority consultation paper released on 12 May 2006 and a number of follow-up meetings to discuss the issues in the paper.

This determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.