Medical Indemnity (Competitive Advantage Payment) Act 2005

No. 125, 2005

An Act to impose a tax on certain medical indemnity insurers, and for related purposes

Medical Indemnity (Competitive Advantage Payment) Act 2005

No. 125, 2005

An Act to impose a tax on certain medical indemnity insurers, and for related purposes

[Assented to 19 October 2005]

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Medical Indemnity (Competitive Advantage Payment) Act 2005.

2 Commencement

This Act commences, or is taken to have commenced, on 1 July 2005.

3 Definitions

In this Act:

competitive advantage payment means a payment that is payable under Division 2A of Part 3 of the Medical Indemnity Act 2002.

contribution year has the meaning given by section 5.

medical indemnity cover has the same meaning as in the Medical Indemnity Act 2002.

medical indemnity insurer has the same meaning as in the Medical Indemnity Act 2002.

net IBNR exposure of a participating MDO has the same meaning as in the Medical Indemnity Act 2002.

participating MDO of a medical indemnity insurer means a participating MDO (within the meaning of the Medical Indemnity Act 2002) that has as a member a person for whom the insurer is providing medical indemnity cover under an arrangement with the participating MDO.

unfunded IBNR factor for a participating MDO has the same meaning as in the Medical Indemnity Act 2002.

4 Imposition of competitive advantage payment

For each contribution year, a competitive advantage payment is imposed as a tax on a medical indemnity insurer if there is a participating MDO of the insurer.

5 Contribution year

(1) Subject to subsection (2), each financial year that starts on or after 1 July 2005, but not after 30 June 2015, is a contribution year.

(2) The regulations may declare that a financial year specified in the regulations is the last contribution year. If they do so, no subsequent financial year is a contribution year.

6 Amount of competitive advantage payment

(1) The amount of the competitive advantage payment imposed on a medical indemnity insurer for a contribution year is the amount worked out as follows:

where:

applicable percentage is such percentage as is specified in the regulations for the contribution year.

net IBNR exposure means the net IBNR exposure of the insurer’s participating MDO as at the end of the financial year that ends immediately before the start of the contribution year.

unfunded IBNR factor is the unfunded IBNR factor of the insurer’s participating MDO.

(2) A regulation made for the purposes of subsection (1):

(a) must not specify as an applicable percentage a percentage that is greater than 15%; and

(b) must not be made before the start of the contribution year to which it relates.

7 Regulations

The Governor‑General may make regulations prescribing matters:

(a) required or permitted by this Act to be prescribed; or

(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.