Victoria Insurance Duty on Endorsements and Refunds: Which Rate Applies?

An endorsement-related premium increase is rated using the endorsement’s effective date, not the premium payment date: in the State Revenue Office guidance, updated 1 July 2026, a contract effected on 1 February 2026 was rated at 8%, while an increase under an endorsement effective 1 July 2026 was rated at 7%. A business insurance duty refund uses the rate that applied when the contract was effected or renewed, not the cancellation date: in the same guidance, a contract effected on 1 January 2026 at 8% had part of its premium refunded on 1 July 2026, but the duty refund was calculated at 8%. Figures checked 1 October 2026.

What rate applies to an endorsement-related premium increase?

The State Revenue Office’s example separates the original premium from the increase caused by the endorsement:

The endorsement added a new kind of business insurance and increased the premium. The 7% rate applies to that increase; it does not replace the original 8% rate for the rest of the contract.

For an ordinary business insurance contract, the rate is determined by the date the contract was effected or renewed. The date the premium was paid does not change that rate.

Why is the refund in the example still calculated at 8%?

An insurer is entitled to a duty refund when it refunds all or part of a dutiable premium for which duty has been paid. For business insurance, the refund corresponds to the original duty paid on the premium amount refunded.

The later cancellation or refund date does not substitute the rate then in force for the original 8% rate. The refund follows the duty originally paid on the premium being refunded.

Which rates apply during Victoria’s phased abolition?

The State Revenue Office says the business insurance duty rate reduces by 1% each year over 10 years, with abolition for contracts effected or renewed on or after 1 July 2033.

The reduction applies automatically; a business does not need to submit an application to receive the reduced rate.

Does every part of a packaged policy receive the phased rate?

No. If a packaged contract contains both business and non-business insurance, the premium must be apportioned. The phased rates apply to APRA-reportable premium parts within the specified business insurance classes, while other premium parts remain rated at 10%.

The State Revenue Office identifies these specified classes under the Australian Prudential Regulation Authority (APRA) Prudential Standard:

• aviation;
• cyber, from 1 January 2025;
• directors and officers (D&O), from 1 January 2025;
• employers’ liability;
• fire and industrial special risks (ISR);
• marine;
• public and product liability; and
• professional indemnity.

Its rural and working farm example shows how a mixed policy is treated for a contract effected on 1 July 2026:

An insurance kind not named in the Prudential Standard may still be business insurance if the insurer must report its premium to APRA under a specified class. However, the Treasurer may make declarations through the Victorian Government Gazette. On 20 June 2024, the Treasurer declared that public liability insurance attaching to householder policies would not be business insurance from 1 July 2024.

What should be checked before applying these examples?

Use the following order:

1. Classify the cover: Determine whether it falls within a specified class or must be reported to APRA under one.
2. Check the contract date: For the original premium and any refund, identify when the contract was effected or renewed.
3. Check the endorsement date: For an endorsement-related increase, use the endorsement’s effective date.
4. Separate mixed cover: If necessary, apportion the premium between business and non-business parts.
5. Review the supporting documents: Check the State Revenue Office page and the policy’s PDS. The State Revenue Office identifies Revenue Ruling DA-068 as detailed guidance on applying the duty reduction.

This is general information, not financial or legal advice. Policy classification, endorsement terms and refund calculations should be checked against the regulator’s guidance and the policy’s PDS.

Sources

• Abolition of duty on business insurance premiums — State Revenue Office
• Revenue Ruling DA-068, referenced in the State Revenue Office guidance

FAQ

Does the premium payment date determine the duty rate?

No. For a business insurance contract, the rate is determined by the date the contract was effected or renewed. The State Revenue Office says the premium payment date does not affect that rate.

Why is a refund on 1 July 2026 calculated at 8% in the example?

The contract was effected on 1 January 2026, when the applicable rate was 8%. Because the refund relates to dutiable premium on which duty was already paid, it is calculated using that original rate rather than the cancellation-date rate.

Does an endorsement reset the duty rate for the whole contract?

No. In the State Revenue Office example, the original contract premium remains rated at 8%. Only the premium increase caused by the endorsement effective 1 July 2026 is rated at 7%.

Can the phased rate be applied to the whole premium of a packaged policy?

Not necessarily. If the package contains business and non-business insurance, the premium must be apportioned. Only the APRA-reportable parts within the specified classes use the phased rates; other parts remain at 10%.