Statute Details
- Title: Income Tax (Concessionary Rate of Tax for Approved Insurance Brokers) Regulations 2017
- Act Code: ITA1947-S610-2017
- Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (specifically, powers under section 43ZC)
- Commencement: Deemed to have come into operation on 1 June 2017
- Current version reference: Current version as at 27 Mar 2026
- Key provisions: Sections 1–5 (Section 6 deleted)
- Most relevant operational provisions: Section 4 (approval), Section 5 (concessionary tax rate and scope)
- Related legislation (by cross-reference): Income Tax Act; Insurance Act 1966
What Is This Legislation About?
The Income Tax (Concessionary Rate of Tax for Approved Insurance Brokers) Regulations 2017 (“the Regulations”) creates a targeted income tax concession for a specific category of businesses: approved insurance brokers. In practical terms, the Regulations allow qualifying approved brokers to pay tax at a concessionary rate on certain types of income—primarily commissions and fees derived from insurance broking and specified advisory services.
The policy rationale is to encourage the insurance broking sector (and related risk advisory capabilities) by reducing the effective tax burden on qualifying income streams. The concession is not automatic for all brokers; it is tied to a formal approval process and to the broker’s eligibility window (i.e., when the broker’s approval is granted). The Regulations also define the scope of “insurance” and “advisory services” to prevent the concession from being applied too broadly.
From a legal and compliance perspective, the Regulations operate as a “gatekeeping” framework: they specify who can be approved, how long approval lasts, and what income is eligible for the reduced rate. They also set out how the Comptroller of Income Tax determines chargeable income for the concessionary regime, including treatment of deductible expenses and losses.
What Are the Key Provisions?
1. Citation and commencement (Section 1)
Section 1 provides the short title and states that the Regulations are deemed to have come into operation on 1 June 2017. This matters for practitioners because the concessionary regime is anchored to the approval and income periods that follow this date.
2. Definitions (Section 2)
Section 2 defines several terms that control eligibility and scope. Key definitions include:
- “insurance broking services”: services of direct insurance broking or reinsurance broking, or both.
- “advisory service”: any risk advisory service or other advisory service relating to an insurance policy.
- “risk advisory services”: design, structuring, modelling, and implementation of a risk management programme using an insurance policy.
- “direct insurer” and “direct life insurer”: defined by reference to the Insurance Act 1966.
- “life business”: also defined by reference to the Insurance Act 1966.
These definitions are critical when advising brokers on whether particular activities (e.g., risk modelling, structuring programmes, or policy-related advisory work) fall within the concessionary base.
3. Application (Section 3)
Section 3 limits the Regulations’ application to an approved insurance broker that is approved on or after 1 June 2017. This reinforces that the concession is conditional on approval and timing.
4. Approval of insurance broker (Section 4)
Section 4 sets out the approval mechanism:
- Who may apply: a company that is a direct insurance broker, general reinsurance broker, or life reinsurance broker.
- Who grants approval: the Minister or an authorised body.
- Public interest test: approval may be granted if the Minister/authorised body considers it expedient in the public interest.
- Approval duration: approval is granted for a period of 5 years.
For practitioners, the “public interest” criterion is a discretionary standard. It is not merely a technical eligibility test; it may require evidence of sectoral value, compliance readiness, and alignment with regulatory objectives.
5. Concessionary rate of tax for income of approved insurance broker (Section 5)
Section 5 is the core of the Regulations. It provides a reduced tax rate on qualifying income—specifically commissions and fees—derived from certain services, subject to exclusions and income determination rules.
(a) The concessionary rate and approval timing
Section 5(1) provides that tax is payable at 10% on commissions and fees derived by an approved insurance broker whose approval is granted on or before 18 February 2025, for income derived from either or both of:
- insurance broking services; and/or
- advisory services
—provided that the services do not relate to any insurance in Section 5(2).
(b) Transitional/extended regime (Section 5(1A))
Section 5(1A) introduces a time-limited extension for approvals granted between 19 February 2025 and 31 December 2028 (inclusive). For such brokers, tax is payable at either 10% or 15%—whichever rate is approved for the insurance broker—on commissions and fees derived on or after 1 January 2025 from the same categories of services (insurance broking services and/or advisory services), again subject to the exclusions in Section 5(2).
(c) What “insurance” is excluded (Section 5(2))
Section 5(2) defines the “insurance” that the concessionary income must not relate to. The extract shows that the relevant excluded categories include:
- Insurance under a direct stand-alone policy (Section 5(2)(a)).
- Insurance against any risk underwritten by a direct life insurer in the course of carrying on its life business (Section 5(2)(b)).
In other words, the concessionary rate is designed to apply to commissions/fees for services that are not connected to these specified insurance categories. This is a significant compliance point: brokers must map their revenue streams to the type of insurance business involved.
(d) Direct stand-alone policy definition (Section 5(4))
Section 5(4) defines “direct stand-alone policy” as a direct insurance policy purchased to cover only certain risks (and not any other risk). The listed risks are:
- fire risk
- motor risk
- work injury compensation risk
- personal accident risk
- health risk
This definition is particularly important for brokers that handle multiple product lines. If a policy covers one of these risks, the concession may not apply to related commissions/fees (depending on how the services relate to the excluded insurance).
(e) How the Comptroller determines chargeable income (Section 5(3))
Section 5(3) provides an administrative determination framework. The Comptroller must determine:
- the income chargeable to tax under the relevant concessionary paragraph, having regard to deductible expenses, capital allowances, and donations allowable under the Income Tax Act; and
- the manner and extent to which losses arising from the provision of the relevant services may be deducted under section 37(3) of the Income Tax Act.
This clause signals that the concessionary regime is not simply a mechanical rate application. It requires proper computation and allocation of income, deductions, and losses tied to the qualifying services.
(f) Deleted provisions (Sections 5(6) and Section 6)
The extract indicates that certain provisions were deleted (including Section 6). Practitioners should therefore rely on the current operative text in Sections 1–5, as amended.
How Is This Legislation Structured?
The Regulations are structured as a short, functional instrument with five main sections (plus a deleted section):
- Section 1: Citation and commencement (deemed commencement on 1 June 2017).
- Section 2: Definitions of key terms (e.g., advisory services, insurance broking services, direct insurer concepts).
- Section 3: Application—applies to approved insurance brokers approved on or after 1 June 2017.
- Section 4: Approval—application by eligible broker companies; Minister/authorised body discretion; 5-year approval period.
- Section 5: Concessionary tax rate—sets the 10% baseline for earlier approvals, introduces 10%/15% for later approvals, defines excluded insurance categories, and provides Comptroller determination rules.
Overall, the Regulations are designed to be read alongside the Income Tax Act and the Insurance Act 1966, because they rely on those statutes for core concepts and computation rules.
Who Does This Legislation Apply To?
The Regulations apply to approved insurance brokers—specifically, companies that are direct insurance brokers, general reinsurance brokers, or life reinsurance brokers—once they obtain approval under Section 4. The approval must be granted on or after 1 June 2017, and approval lasts for five years.
In addition, the concessionary tax rate applies only to commissions and fees derived from qualifying insurance broking services and/or advisory services, and only to the extent those services do not relate to the excluded insurance categories defined in Section 5(2) (including direct stand-alone policies covering specified risks and certain life business underwriting by direct life insurers).
Why Is This Legislation Important?
This Regulations is important because it directly affects the effective tax cost of insurance broking and advisory income for qualifying brokers. For a practitioner advising an insurance broker, the key value is that the Regulations provide a reduced tax rate—but only within a carefully bounded eligibility framework.
From an enforcement and compliance standpoint, the most practical issues typically arise in three areas:
- Approval status and timing: whether the broker’s approval falls within the “on or before 18 February 2025” window or the “19 February 2025 to 31 December 2028” window, and what rate (10% or 15%) was approved for that broker.
- Revenue classification: whether commissions/fees relate to excluded insurance categories (direct stand-alone policies for specified risks; insurance underwritten by direct life insurers in life business).
- Tax computation: how the Comptroller determines chargeable income, including allocation of deductible expenses and treatment of losses under the Income Tax Act.
For legal counsel, the Regulations therefore require both regulatory advice (approval strategy, documentation, and public interest considerations) and tax advisory support (segregation of income streams, contractual analysis of what services relate to what insurance, and readiness for Comptroller determination of chargeable income).
Related Legislation
- Income Tax Act (including provisions on chargeable income, deductions, and specifically references such as section 37(3) and the enabling power in section 43ZC)
- Insurance Act 1966 (definitions of direct insurer, direct life insurer, and life business)
Source Documents
This article provides an overview of the Income Tax (Concessionary Rate of Tax for Approved Insurance Brokers) Regulations 2017 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.