Overview

The Life Insurance Supervisory Levy Imposition Determination 2006 was enacted to implement the provisions of the Life Insurance Supervisory Levy Imposition Act 1998, which seeks to address gaps in the regulation and supervision of friendly societies and life insurance entities. The determination was made by the Treasurer under the authority granted by the Act and is a legislative instrument pursuant to the Legislative Instruments Act 2003. The primary policy objective behind this levy is to ensure that there are sufficient resources for the Australian Prudential Regulation Authority to effectively supervise and regulate life insurance entities, thus safeguarding policyholders’ interests and maintaining the stability of the financial sector. The levy rates for the 2006-07 financial year were set at 0.00540 per cent for the restricted component and 0.000981 per cent for the unrestricted component of the levy, with specific minimum and maximum thresholds applied. The determination revokes the previous Life Insurance Supervisory Levy Imposition Determination 2005 upon its commencement on 1 July 2005.

Scope and Application

The Life Insurance Supervisory Levy Imposition Determination 2006 applies to friendly societies and life insurance entities, governing the imposition of a levy as stipulated by the Life Insurance Supervisory Levy Imposition Act 1998. The levy is applicable to the financial year 2006-07 and specifies both restricted and unrestricted components, which are calculated based on the entities' asset values. The restricted component is set at 0.00540 per cent of the assets, with a minimum of $470 and a maximum of $700,000, while the unrestricted component is calculated at 0.000981 per cent of the assets. This determination also revokes the Life Insurance Supervisory Levy Imposition Determination 2005 upon its commencement on 1 July 2005. The Act ensures that any obligations or liabilities incurred in previous financial years remain valid under the Acts Interpretation Act 1901. The application of this determination is limited to the Commonwealth of Australia, and it does not extend to state or territory jurisdictions. The determination is a legislative instrument as defined under the Legislative Instruments Act 2003.

Key Provisions

The main operative sections of this determination, under the Life Insurance Supervisory Levy Imposition Act 1998, include section 7(3) which empowers the Treasurer to set various aspects of the levy for each financial year. Specifically, subsection 7(3)(a) establishes the maximum restricted levy amount, while subsection 7(3)(b) sets the minimum restricted levy amount for the 2006-07 financial year. Subsection 7(3)(c) specifies the restricted levy percentage, and subsection 7(3)(ca) establishes the unrestricted levy percentage. Finally, subsection 7(3)(d) outlines the method for calculating a life insurance company’s asset value. For the 2006-07 financial year, the restricted component of the levy is set at 0.00540 per cent of the entity’s assets, with a minimum of $470 and a maximum of $700,000, as per section 7(3)(a) and (b). The unrestricted component of the levy is set at 0.000981 per cent of the entity’s assets, as per section 7(3)(ca). The obligations and requirements imposed by this determination on the entities it governs include the calculation of their supervisory levy based on the specified percentages and asset values. Friendly societies and life insurance entities must adhere to the stipulated minimum and maximum thresholds for the restricted levy, as outlined in section 7(3)(a) and (b). Furthermore, they must accurately determine their asset values in accordance with the method prescribed in section 7(3)(d), ensuring compliance with the overall levy requirements for the financial year. There are no explicit offences, penalties, or civil/criminal consequences for breach detailed in this determination. However, entities that fail to comply with the levy requirements could potentially face regulatory scrutiny or enforcement actions by the relevant authorities, such as the Australian Prudential Regulation Authority. While specific penalties are not mentioned in this determination, non-compliance could result in the entity being required to rectify their levy calculations and potentially face financial penalties or other administrative consequences as determined by the applicable regulatory framework.