EXPLANATORY STATEMENT

Life Insurance Supervisory Levy Imposition Determination 2008

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

This determination commences on 1 July 2008 and relates to the 2008‑09 financial year.  The Life Insurance Supervisory Levy Imposition Determination 2007 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 Minister 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 2008‑09 levy will be calculated at 0.00701 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 2008-09 levy will be calculated at 0.001286 per cent of assets held by the entity.

The finance sector has been consulted on the 2008‑09 supervisory levies through a Treasury and Australian Prudential Regulation Authority Consultation Paper released on 28 May 2008 and a number of follow-up meetings to discuss the issues in the paper.

Although this determination does not allude specifically to friendly societies, they are considered as leviable bodies, as they are registered under the Life Insurance Act 1995 and consequently fall under the definition of ‘life insurance company’ of the Financial institutions Supervisory Levies Collection Act 1998.  As subsection 16C(1) of the Life Insurance Act 1995 notes, item 11 of Schedule 8 to the Financial Sector Reform (Amendments and Transitional Provisions) Act 1999 provided that friendly societies existing then are taken to be registered under the Life Insurance Act 1995.

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