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Strata report reveals scale of tax burden

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More than a quarter of strata premiums went to government taxes such as GST and stamp duties, according to a report commissioned by peak body Strata Community Association (SCA).

SCA says the report is an “eye opener” as it again pushes for the removal of taxes on insurance products to ease the premium affordability pressure, especially for those living in catastrophe-prone northern Australia.

National President Andrew Chambers says the SCA hopes that with this report, it can “implore governments” to reconsider the insurance tax regime.

“It’s not an equitable base,” Mr Chambers told insuranceNEWS.com.au. “Some of the premiums you are talking in the millions of dollars because of the location.

“It is a penalty because of where they are living. They are being penalised.”

According to the report, there are several duties, levies and taxes that significantly impact the total cost of insurance for strata schemes. All jurisdictions impose GST and most states impose stamp duty.

The report found 165,554 owners corporations – defined as a body corporate, strata company, or community association – paid more than $830 million in strata insurance premiums and nearly $230 million in duties, levies and taxes last year.

Some 27.45% of strata premiums on average were for taxes and levies charged by state, territory and federal governments.

“Breaking down the total costs of insurance, premiums and the amount of duties, levies and taxes charged was a real eye-opener to just how much the consumer is paying in taxes just to take out a policy that is compulsory,” Mr Chambers said.

“If you’re taking out a strata insurance policy in Australia as a strata community then more than a quarter of what you pay on average goes to government taxes, stamp duties and levies.”

He says in NSW the figure is closer to 40%.

SCA says the report aims to provide a comprehensive data-driven view of strata insurance in Australia.

The report prepared by Deakin University in Victoria surveyed 454 strata managers and 280 strata lot owners, analysed 58 versions of state and territory strata management agreements, investigated 38 pieces of legislation and regulation and gathered complex data from insurers.

Click here for the report.