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Stamp Duty on Car Insurance

Find out what stamp duty on car insurance is and how it works through Savvy’s helpful guide.

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, updated on February 15th, 2024       

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When it comes to car insurance in Australia, it's essential to have a clear understanding of all the factors that contribute to the cost. One of these factors which you may not know about is stamp duty. Stamp duty is a tax imposed by Australian state governments on various transactions, including car insurance policies.

Learn more about stamp duty and how it works with car insurance in Australia with Savvy. In our informative guide, we’ll delve into the details of stamp duty on car insurance, including how it’s calculated, exemptions or discounts available and more.

What is stamp duty on car insurance?

Stamp duty on car insurance is a tax imposed by state governments in Australia on insurance policies, including car insurance. It’s a one-time payment and is calculated as a percentage of the insurance premium. This is charged to your insurer, rather than you directly, by your state or territory government, after which the cost is typically passed onto you via your premium payments.

It's important to note that the way stamp duty works on insurance and its cost varies depending on the state or territory you’re living in so it’s important to consult with relevant government resources for the most up-to-date information

How is stamp duty calculated on car insurance?

The calculation of stamp duty on car insurance varies among Australian states and territories. It’s generally based on a percentage of the total insurance premium, which includes the base premium and any additional charges or fees.

The percentage can range up to 10% or more of the premium amount, depending on the state or territory in which the car is registered. For instance, while this sits at 5% in New South Wales, it’s charged at a rate of 10% in Victoria and 11% in South Australia. From there, how your insurance premium is calculated and where the cost of stamp duty factors in will be up to your insurance company.

The calculation method and specific rates can change over time due to government regulations and policies, so if you’re unsure of how this might apply to you, it’s important to check your state or territory government website for relevant information.

Why do I have to pay stamp duty on my car insurance policy in Australia?

The payment of stamp duty on car insurance is a legal requirement mandated by state governments around Australia. It helps generate revenue for government budgets and funds various public services, such as healthcare, education, infrastructure, and emergency services. The specific reasons for imposing stamp duty on car insurance may vary among states, but it’s a common practice across the country.

Are there any exemptions or discounts for stamp duty on car insurance?

No – car insurance typically doesn’t come with any associated exemptions or discounts when it comes to stamp duty. The exemptions and discounts for stamp duty on car insurance are determined by the regulations of each state or territory government.

Some of the situations where your insurer may be eligible for an exemption (and not pass the cost of stamp duty onto you through your premiums) can include:

  • Workers compensation insurance
  • Livestock and crops which are grown or harvested
  • Physical hulls of commercial floating vessels
  • Machinery designed and used for agricultural purposes

More questions about stamp duty on car insurance answered

Can I pay stamp duty separately from my car insurance premium?

Because stamp duty on car insurance is included in your premium in most cases, it cannot be paid separately. The insurance provider collects the stamp duty amount directly via the premium and remits it to the relevant state or territory government. Therefore, it generally isn’t possible to separate the stamp duty payment from the insurance premium.

Is stamp duty refundable if I cancel my car insurance policy?

Stamp duty on car insurance is non-refundable in most cases if you cancel your policy. Once the stamp duty has been paid by your insurer, it’s usually considered a non-refundable government tax. Even if you cancel your car insurance before the policy term ends, the stamp duty portion is typically not refunded to your insurer.

Do I have to pay stamp duty every time I renew my car insurance?

Stamp duty on car insurance is generally payable when you purchase a new policy or renew an existing one. Therefore, your insurer will have to pay stamp duty each time you renew your car insurance, meaning you’ll likely be liable to cover this cost each year through your premiums.

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