Overview

The Life Insurance Supervisory Levy Imposition Determination 2016 was enacted to establish the levy rates for the 2016-17 financial year on life insurance entities, as authorised by the Life Insurance Supervisory Levy Imposition Act 1998. This Act was introduced to ensure adequate funding for the supervision of life insurance entities, addressing a gap in the regulatory framework that required a structured financial contribution from these entities. The determination was made by the Treasurer, in accordance with the provisions of the Act, and was enacted by the Parliament of Australia. The policy objective is to maintain effective regulatory oversight of the life insurance sector, ensuring that the financial burden is distributed fairly across entities based on their asset values. This determination specifies the restricted and unrestricted components of the levy, calculated as a percentage of the assets held by the entities, with minimum and maximum thresholds to ensure fairness and adequacy of the imposed charges.

Scope and Application

The Life Insurance Supervisory Levy Imposition Determination 2016 applies to life insurance entities, including entities registered under the Life Insurance Act 1995, which are considered as leviable bodies and thus fall under the definition of ‘life insurance company’ as per the Financial Institutions Supervisory Levies Collection Act 1998. This determination, which commenced on 1 July 2016, pertains to the 2016-17 financial year and replaces the Life Insurance Supervisory Levy Imposition Determination 2015. The determination sets out the restricted and unrestricted components of the levy for the specified financial year, with the restricted levy calculated at 0.00419 per cent of assets held by the entity, subject to a minimum of $5,000 and a maximum of $1,320,000, and the unrestricted component at 0.004778 per cent of assets. Although the determination does not explicitly address friendly societies, they are included within its scope as they are registered under the Life Insurance Act 1995. The determination is a legislative instrument under the Legislative Instruments Act 2003 and has been deemed compatible with human rights as it does not engage any of the applicable rights or freedoms as recognised or declared in the international instruments listed in the Human Rights (Parliamentary Scrutiny) Act 2011.

Key Provisions

The Life Insurance Supervisory Levy Imposition Determination 2016 (the Determination) sets out the levy that life insurance entities must pay for the 2016-17 financial year, in accordance with the Life Insurance Supervisory Levy Imposition Act 1998 (the Act) (sections 1, 7(3)). The Determination specifies that the restricted component of the levy is to be calculated at 0.00419 per cent of the entity’s assets, with a minimum of $5,000 and a maximum of $1,320,000. The unrestricted component is to be calculated at 0.004778 per cent of the entity’s assets (section 1). Friendly societies, which are registered under the Life Insurance Act 1995, are also subject to these levies as they fall under the definition of a 'life insurance company' in the Financial Institutions Supervisory Levies Collection Act 1998 (section 1). The Determination imposes on life insurance entities the obligation to calculate their levy based on the percentages and asset values specified in the Determination. Entities must ensure that they accurately determine their levy base assets and apply the correct percentage to this amount to calculate their levy for the financial year. They must also be aware of the minimum and maximum thresholds for the restricted component of the levy (section 1). The Act does not explicitly state any offences or penalties for non-compliance with the Determination. However, failure to accurately calculate and pay the supervisory levy could potentially lead to civil or administrative penalties under other relevant legislation. Entities are expected to adhere to the provisions of the Determination to avoid any legal consequences that might arise from non-compliance with financial obligations imposed by law (section 7). Entities that do not comply with the Determination may face scrutiny from regulatory authorities, such as the Australian Prudential Regulation Authority (APRA), which oversees the financial sector. Non-compliance could result in regulatory action, including fines or other sanctions. Additionally, the Determination notes that a Regulatory Impact Statement is not required as supervisory levies are considered machinery-of-government in nature. This suggests that the primary focus is on compliance rather than imposing specific penalties within the Determination itself (sections 1, 12(2), 12(3)).