Overview

The Life Insurance Supervisory Levy Imposition Determination 2018 was enacted to provide specific details for the imposition of a levy on life insurance entities as required by the Life Insurance Supervisory Levy Imposition Act 1998. This determination, which came into effect on 1 July 2018, specifies the levy rates and parameters for the 2018-19 financial year, replacing the previous year’s determination. The enactment of this legislation falls under the authority of the Treasurer, who is mandated by the Act to determine the levy percentages and amounts annually. The policy objective is to ensure the financial stability and regulatory oversight of life insurance entities through the collection of supervisory levies, with a focus on maintaining adequate capital and operational standards within the sector.

Scope and Application

The Life Insurance Supervisory Levy Imposition Determination 2018 applies to life insurance entities as defined under the Life Insurance Act 1995, which includes entities such as friendly societies that are registered under the Life Insurance Act 1995. The determination is made pursuant to the Life Insurance Supervisory Levy Imposition Act 1998, which imposes a levy on these entities to support the costs of regulating the life insurance sector. The determination outlines the parameters of the levy for the 2018-19 financial year, including the restricted and unrestricted levy percentages, and specifies how the levy base asset is to be calculated. The restricted levy is calculated at 0.01009 per cent of assets held by the entity, with a minimum of $15,000 and a maximum of $750,000, while the unrestricted levy is calculated at 0.003365 per cent of assets held by the entity. This legislative instrument applies nationally across Australia and supersedes the Life Insurance Supervisory Levy Imposition Determination 2017. The determination does not specify any exclusions or exemptions, and it is consistent with the requirement that any obligations or liabilities incurred in previous financial years remain valid. The commencement of this determination before its registration does not affect the rights of any person or impose any liabilities prior to registration, in accordance with the relevant legislative provisions.

Key Provisions

The main operative sections of this determination (subsection 7(3)) require the Treasurer to set specific parameters for the life insurance supervisory levy for the 2018-19 financial year. These include the maximum and minimum restricted levy amounts, the restricted and unrestricted levy percentages, and the method for calculating a life insurance company's levy base asset. For the 2018-19 financial year, the restricted levy is set at 0.01009 per cent of assets, with a minimum of $15,000 and a maximum of $750,000, while the unrestricted levy is set at 0.003365 per cent of assets. The obligations imposed by this determination on the parties it governs, primarily life insurance entities, include compliance with the specified levy percentages and asset calculation methods. These entities must accurately calculate their levy based on the prescribed percentages and ensure that they fall within the stipulated minimum and maximum limits. Friendly societies, which are registered under the Life Insurance Act 1995, are also subject to these obligations as they are considered life insurance companies under the Financial Institutions Supervisory Levies Collection Act 1998. The consultation process with the finance sector, as noted, involved the Treasury and the Australian Prudential Regulation Authority (APRA), ensuring that the entities understand and comply with the levy requirements. Any breach of the obligations set out in this determination could lead to civil or criminal consequences. The specific penalties for non-compliance are not detailed in the determination itself but would generally fall under the provisions of the Life Insurance Supervisory Levy Imposition Act 1998. For example, failure to pay the correct amount of levy could result in fines or other penalties as prescribed by the relevant legislation. The determination ensures that any obligations or liabilities incurred in previous financial years remain valid, and the commencement of the determination does not adversely affect the rights of any person or impose any liability for actions taken before the registration date.