Overview

The Life Insurance Supervisory Levy Imposition Determination 2009 was enacted to address the need for levy rates on life insurance entities for the 2009-10 financial year, as stipulated by the Life Insurance Supervisory Levy Imposition Act 1998. This Act was established by the Commonwealth Parliament to impose a levy on life insurance entities to fund the Australian Prudential Regulation Authority's (APRA) supervision of these entities. The explanatory statement for the 2009 determination outlines that it was created to provide clarity on the levy percentages and asset calculations, particularly in light of the introduction of the First Home Saver Account (FHSA) and subsequent amendments to the Life Insurance Supervisory Levy Imposition Act 1998. This determination ensures that the restricted and unrestricted components of the levy are clearly defined, aiming to maintain adequate funding for APRA's regulatory activities while considering the financial impacts on life insurance entities.

Scope and Application

The Life Insurance Supervisory Levy Imposition Determination 2009 applies to life insurance entities as defined by the Life Insurance Supervisory Levy Imposition Act 1998, including entities that fall under the definition of ‘life insurance company’ as per the Financial Institutions Supervisory Levies Collection Act 1998, such as friendly societies registered under the Life Insurance Act 1995. This determination pertains to the 2009-10 financial year, and it supersedes the Life Insurance Supervisory Levy Imposition Determination 2008 upon its commencement on 1 July 2009. Any obligations or liabilities incurred in previous financial years remain valid. The Act sets out the methodology for calculating the supervisory levy, distinguishing between restricted and unrestricted components, with the restricted component subject to a minimum and maximum threshold and the unrestricted component calculated at a specific percentage of the entity's assets. Notably, the asset value calculation excludes the total balances of all First Home Saver Accounts provided by the life insurance company, which are subject to a separate levy. The determination is a legislative instrument under the Legislative Instruments Act 2003 and is applicable nationally within Australia.

Key Provisions

The Life Insurance Supervisory Levy Imposition Determination 2009 sets out the specific details for the levy imposed on life insurance entities for the 2009-10 financial year. According to section 7(3) of the Life Insurance Supervisory Levy Imposition Act 1998, the Minister determines the maximum and minimum restricted levy amounts, the restricted and unrestricted levy percentages, and the method for calculating a life insurance company's asset value. The determination specifies that the restricted component of the levy will be 0.00920 per cent of the assets held by the entity, with a minimum of $470 and a maximum of $910,000. The unrestricted component will be 0.001823 per cent of the assets held by the entity. The asset value calculation must exclude the total balances of all First Home Saver Accounts (FHSA) provided by the life insurance company, as per the amendment introduced by the First Home Saver Accounts Act 2008. The obligations and requirements imposed by this determination on life insurance entities include calculating the levy based on the specified percentages and asset values. Life insurance entities must exclude FHSA balances from their asset calculations, ensuring accuracy and compliance with the legislative provisions. Furthermore, the entities must account for both restricted and unrestricted components of the levy in their financial planning and reporting for the 2009-10 financial year. The determination also mandates that friendly societies, registered under the Life Insurance Act 1995, are subject to the same levy requirements as other life insurance companies. Failure to comply with the provisions of the Life Insurance Supervisory Levy Imposition Determination 2009 can result in various legal consequences. While the specific offences and penalties are not detailed in the determination itself, the Life Insurance Supervisory Levy Imposition Act 1998 provides a framework for enforcement. Non-compliance could lead to civil or criminal penalties, depending on the nature and severity of the breach. The maximum penalties are not specified in this determination but are likely to be outlined in the overarching Act, which could include fines, corrective actions, or other regulatory measures to ensure adherence to the levy requirements.