New South Wales small businesses received a massive boost in the 2017 budget with the announcement that stamp duty would be slashed on a range of policies for enterprises with an annual turnover of $2 million or less.

That means around 600,000 businesses will save a combined $318 million under the plan while others will have incentive to take up insurance policies they otherwise may not have been able to afford. New South Wales Treasurer Dominic Perrottet said the measures were designed to boost small business in the state.

“Our reforms send a strong signal to the market that this state continues to be a great place to do business,” he said.

And Council of Small Business Australia chief executive Peter Strong added that these measures would also encourage further competition amongst the insurers

While this is a great initiative for NSW SMEs, could the same measures be rolled out in other states and territories?

Which insurances will be impacted by these changes?

There are five main NSW insurance policies that will be affected by these changes, with the following to now be exempt from stamp duty for SME’s with an annual turnover of less than $2 million:

Commercial vehicle insurance: cover for motor vehicles used primarily for business purposes

Commercial aviation insurance: cover for aircraft used primarily for business purposes

Professional indemnity insurance: Protection for professionals who provide advice or a service to their customers against legal costs and claims for damages.

Product and public liability insurance: Protection against claims of personal injury or property damage caused by products sold or supplied.

Crop and livestock: Protection against the effects of yield reductions and crop or livestock losses caused by naturally occurring perils.

There will be further reductions in fees as well, with insurance providers paying the State Government the duty under the old system. The axing of the system is expected to eliminate fees that ranged from 2.5 to 9 per cent, depending on the policy.

Will the other states and territories follow suit?

Queensland: there is a major push for similar measures to be rolled out, with the call the loudest in the north of the state. Townsville-based LNP Senator Ian Macdonald wants to see it happen to ease cost of living pressures.

South Australia: SA already has exemptions on the duty payable on multi-peril crop insurance (MPCI) premiums. This is expected to continue with all parties showing support to extend the exemption.

Western Australia: There are no plans to follow suit and given the Federal Government is trying to funnel money from the GST from other states and territories to WA, it would appear unlikely stamp duty cuts will happen anytime soon.

Victoria: This state already followed NSW in abolishing stamp duty for first home buyers, so it could be viable that happens with stamp duty for small business insurance as well.

Northern Territory: The NT economy is struggling, but stamp duty is one of its main streams of revenue. Axing it would be a catch 22 and unlikely to happen in the short term.

Tasmania: There are presently no plans for stamp duty to be cut from small business insurance premiums on the Apple Isle.

ACT: The territory is currently in its seventh year of a 20 year plan to replace stamp duties with broad-based property taxes in the housing market. Following NSW could well be considered.

It is early days in terms of other states and territories following NSW, but one thing is for sure – they will pay a keen eye on how the scheme works. If the measures can successfully boost the productivity of small business and improve competition in the insurance sector without taking a heavy toll on the state’s budget, it could well be rolled out elsewhere.

If you’re in the market to take your business to the next level, find out how the Morris Finance team can help you get started.