{"id":"C2004A00317","name":"Life Insurance Supervisory Levy Imposition Act 1998","slug":"life-insurance-supervisory-levy-imposition-act-1998","collection":"act","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"57 of 1998","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":5953,"registerId":"commonwealth-C2004A00317-current","compilationNumber":null,"startDate":"2026-03-30","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Short title","content":"#### 1 Short title\n\n  This Act may be cited as the Life Insurance Supervisory Levy Imposition Act 1998.","sortOrder":0},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n  (1) This Act commences on the commencement of the Australian Prudential Regulation Authority Act 1998.\n  (2) If this Act commences during a financial year (but not on 1 July of that financial year), this Act has effect in relation to that financial year subject to the modifications specified in the regulations.","sortOrder":1},{"sectionNumber":"3","sectionType":"section","heading":"Act binds the Crown","content":"#### 3 Act binds the Crown\n\n  This Act binds the Crown in each of its capacities.","sortOrder":2},{"sectionNumber":"4","sectionType":"section","heading":"External Territories","content":"#### 4 External Territories\n\n  This Act extends to each external Territory.","sortOrder":3},{"sectionNumber":"5","sectionType":"section","heading":"Definitions","content":"#### 5 Definitions\n\n  In this Act, unless the contrary intention appears:\n\n> indexation factor means the indexation factor calculated under section 8.\n\n> index number, in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.\n\n> levy imposition day, in relation to a life insurance company for a financial year, means:\n\n    (a) if the life insurance company is a life insurance company on 1 July of the financial year—that day; or\n    (b) in any other case—the day, during the financial year, on which the life insurance company becomes a life insurance company.\n\n> life insurance company means a company that is registered under section 21 of the Life Insurance Act 1995.\n\n> statutory upper limit means:\n\n    (a) for the financial year commencing on 1 July 2020—$10,000,000; or\n    (b) for a later financial year—the amount calculated by multiplying the statutory upper limit for the previous financial year by the indexation factor for the later financial year.","sortOrder":4},{"sectionNumber":"6","sectionType":"section","heading":"Imposition of life insurance supervisory levy","content":"#### 6 Imposition of life insurance supervisory levy\n\n  Levy payable in accordance with subsection 8(4) of the Financial Institutions Supervisory Levies Collection Act 1998 is imposed.","sortOrder":5},{"sectionNumber":"7","sectionType":"section","heading":"Amount of levy","content":"#### 7 Amount of levy\n\n  (1) Subject to subsection (2), the amount of levy payable by a life insurance company for a financial year is the sum of the restricted levy component and the unrestricted levy component for the financial year.\n\n> Note: For restricted levy component, see subsection (1A). For unrestricted levy component, see subsection (1B).\n\n  (1A) The restricted levy component for the financial year is:\n    (a) unless paragraph (b) or (c) applies—the amount that, for the financial year, is the restricted levy percentage of the life insurance company’s levy base; or\n    (b) if the amount worked out under paragraph (a) exceeds the maximum restricted levy amount for the financial year—the maximum restricted levy amount; or\n    (c) if the amount worked out under paragraph (a) is less than the minimum restricted levy amount for the financial year—the minimum restricted levy amount.\n\n> Note: The restricted levy percentage, maximum restricted levy amount, minimum restricted levy amount and the method of working out the life insurance company’s levy base are as determined under subsection (3).\n\n  (1B) The unrestricted levy component for the financial year is the amount that, for the financial year, is the unrestricted levy percentage of the life insurance company’s levy base.\n\n> Note: The unrestricted levy percentage is as determined under subsection (3).\n\n  (2) If the levy imposition day for the life insurance company for the financial year is later than 1 July in the financial year, the amount of levy payable by the life insurance company for the financial year is the amount worked out using the following formula:\n  ![](image.002.png)\n  (3) The Treasurer is, by legislative instrument, to determine:\n    (a) the maximum restricted levy amount for each financial year; and\n    (b) the minimum restricted levy amount for each financial year; and\n    (c) the restricted levy percentage for each financial year; and\n    (ca) the unrestricted levy percentage for each financial year; and\n    (d) how a life insurance company’s levy base is to be worked out.\n  (4) An amount determined under subsection (3) as the maximum restricted levy amount for a financial year must not exceed the statutory upper limit for the financial year.\n  (5) The Treasurer’s determination under paragraph (3)(d) of how a life insurance company’s levy base is to be worked out is to include, but is not limited to, a determination of the day as at which the life insurance company’s levy base is to be worked out. That day must be:\n    (a) if the life insurance company was a life insurance company at all times from and including 17 March of the previous financial year to and including the following 30 June—a day in the period from and including that 17 March to and including the following 14 April; or\n    (b) if the life insurance company was not a life insurance company at all times from and including 17 March of the previous financial year to and including the following 30 June—the day after that 17 March when the life insurance company became, or becomes, a life insurance company.\n  (6) A determination under subsection (3) may make different provision for different classes of life insurance companies.","sortOrder":6},{"sectionNumber":"8","sectionType":"section","heading":"Calculation of indexation factor","content":"#### 8 Calculation of indexation factor\n\n  (1) The indexation factor for a financial year is the number worked out by:\n    (a) ascertaining the index number for the most recent quarter for which the Australian Statistician has published an index number, as at the start of the day on which the Treasurer makes the first determination under subsection 7(3) of an amount or percentage for the financial year; and\n    (b) dividing that index number by the index number for the quarter 12 months before the quarter mentioned in paragraph (a); and\n    (c) adding 0.030 to the number worked out under paragraph (b).\n  (2) The indexation factor is to be calculated to 3 decimal places, but increased by .001 if the 4th decimal place is more than 4.\n  (3) Calculations under subsection (1):\n    (a) are to be made using only the index numbers published in terms of the most recently published index reference period for the Consumer Price Index; and\n    (b) are to be made disregarding index numbers that are published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the index reference period).","sortOrder":7},{"sectionNumber":"9","sectionType":"section","heading":"Regulations","content":"#### 9 Regulations\n\n  The Governor‑General may make regulations for the purposes of subsection 2(2).","sortOrder":8}],"analysis":{"issue_detection":{"absurdities":[{"type":"other","section":"8(1)(c)","severity":"medium","reasoning":"The formula adds 0.030 unconditionally to the CPI ratio. If CPI is flat (ratio = 1.000), the indexation factor becomes 1.030, imposing a 3% floor on cap growth. If CPI falls (deflation), the cap still grows. This means the statutory upper limit on levies is structurally incapable of decreasing, which may be intentional policy but is logically disconnected from the stated purpose of CPI-indexation. A true CPI indexation would simply use the ratio without the addend.","confidence":0.82,"description":"The indexation factor adds a fixed 0.030 to the CPI ratio, meaning the statutory upper limit can never decrease even in periods of deflation, and always increases by at least 3% regardless of actual inflation conditions."},{"type":"impossible_compliance","section":"7(5)(b)","severity":"medium","reasoning":"Section 7(5)(b) identifies the levy base date as the day the company became a life insurance company, but s.5 defines levy imposition day as the day the company becomes a life insurance company during the current financial year. If both days are the same, the company must compute its levy base as at the very day it is registered, which may be before any financial data exists in a regulatory context. Additionally, the cross-reference to '17 March of the previous financial year' is nonsensical for a company that did not exist at that time — the phrase 'the day after that 17 March' is temporally anchored to a past date the company had no connection with.","confidence":0.72,"description":"For a company that was not a life insurance company throughout the reference period, the levy base day is determined as 'the day after that 17 March when the life insurance company became, or becomes, a life insurance company' — but if the company only became registered after 30 June of the previous financial year (i.e., during the current financial year), this day falls entirely outside the prescribed measurement window and may post-date the levy imposition day itself."},{"type":"circular_definition","section":"2(2)","severity":"low","reasoning":"Section 9 grants regulation-making power only 'for the purposes of subsection 2(2)'. Subsection 2(2) in turn says the Act applies subject to 'modifications specified in the regulations'. The Act contains no other regulation-making power, so the entire regulatory framework is confined to a single transitional provision. While not strictly circular in a logical sense, the extreme narrowness of the power means any broader administrative need arising from mid-year commencement cannot be addressed.","confidence":0.65,"description":"Subsection 2(2) promises regulations will specify how the Act applies if it commences mid-financial-year, but section 9 is the only regulations power, and it is narrowly confined solely to subsection 2(2). This creates a self-referential regulatory loop where the only thing regulations can do is fix the commencement anomaly they themselves are authorised by."},{"type":"impossible_compliance","section":"7(2)","severity":"high","reasoning":"A legislative provision imposing a financial obligation must be ascertainable. Subsection 7(2) states the levy amount 'is the amount worked out using the following formula' and then references an image file. Persons subject to the levy cannot determine their legal obligation from the text alone. While this may be a reproduction artefact, the Act as presented contains an unenforceable provision.","confidence":0.95,"description":"The formula in subsection 7(2) for pro-rating levy when a company joins mid-year is referenced but the actual formula image is missing (rendered as 'image.002.png'), making the provision literally unascertainable from the text of the Act as reproduced."},{"type":"circular_definition","section":"5 (definition of statutory upper limit, paragraph (b))","severity":"medium","reasoning":"Under s.8(1)(a), the indexation factor is calculated using the CPI index number current 'as at the start of the day on which the Treasurer makes the first determination under subsection 7(3)'. The statutory upper limit under s.7(4) constrains that very determination. So the Treasurer cannot lawfully make a determination without knowing the statutory upper limit, but the statutory upper limit's indexation factor is only fixed at the moment of that determination. This creates a logical simultaneity problem: the constraint on the determination and the act of determination occur at the same instant.","confidence":0.78,"description":"The statutory upper limit for years after 2020 is defined recursively — each year's limit equals the prior year's limit multiplied by the current year's indexation factor. This creates an infinite recursive chain anchored to the 2020 base, which is mathematically workable but means the cap for any given year cannot be known until the Treasurer makes the first determination under s.7(3) for that year, because the indexation factor depends on that determination date (s.8(1)(a))."}],"contradictions":[{"severity":"medium","section_a":"7(1A)(b) and 7(1A)(c)","section_b":"7(1A)(a)","confidence":0.7,"description":"The restricted levy component formula in s.7(1A) can produce a result where the minimum restricted levy amount exceeds the maximum restricted levy amount, making the provision logically inoperable. If the Treasurer determined (contrary to good practice but not explicitly prohibited) a minimum that exceeds the maximum, paragraph (b) and paragraph (c) would simultaneously apply and demand contradictory outcomes."},{"severity":"medium","section_a":"7(4)","section_b":"7(3)(a)","confidence":0.75,"description":"Section 7(4) prohibits the maximum restricted levy amount from exceeding the statutory upper limit, but the statutory upper limit itself depends on the indexation factor which is only fixed at the moment the Treasurer makes the first determination under s.7(3). The constraint in s.7(4) is therefore indeterminate at the time the determination must be made, creating a situation where the Treasurer cannot verify compliance with s.7(4) before the act that triggers the calculation of the limit."},{"severity":"low","section_a":"7(5)(a)","section_b":"7(5)(b)","confidence":0.68,"description":"Section 7(5)(a) sets the levy base date within the window 17 March to 14 April of the previous financial year for established companies. Section 7(5)(b) sets it as the day the company became a life insurance company for others. A company that became registered on, say, 1 April of the previous financial year satisfies neither condition cleanly — it was not 'a life insurance company at all times from and including 17 March' (so (a) does not apply), yet (b) directs back to 'the day after that 17 March when the life insurance company became' a company, which would be 2 April. This date falls within the s.7(5)(a) window, yet the company is excluded from (a) and routed to (b), producing an inconsistent treatment compared to a company registered before 17 March."}]},"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"summary":{"complexity_score":5,"scope_assessment":{"changed":false,"description":"The Act remains tightly focused on its original purpose: imposing a supervisory levy on registered life insurance companies to fund APRA's oversight role. The 2020 updates (introducing the unrestricted levy component and setting the statutory upper limit) represent a refinement and expansion of the levy mechanism rather than a departure from the original intent."},"complexity_factors":["Dual-component levy structure (restricted and unrestricted components) with different calculation rules for each","Levy amounts are not set in this Act — they are delegated to the Treasurer via separate legislative instruments, meaning the full picture requires reading multiple documents","CPI-linked indexation formula with specific rounding rules adds mathematical complexity","Pro-rata calculation for mid-year entrants references a formula depicted as an image (not reproduced in text), creating an information gap","Specific date-based rules (17 March, 14 April, 30 June) for determining the levy base calculation day require careful reading","Cross-references to at least two other Acts (Life Insurance Act 1995, Financial Institutions Supervisory Levies Collection Act 1998) are required for full comprehension","Provision for different rules to apply to different classes of life insurance companies adds potential variation"],"plain_english_summary":"Requires registered life insurers to pay an annual supervisory levy to fund APRA’s oversight. The levy has restricted and unrestricted components (percentages set annually by the Treasurer); the restricted component has a statutory cap (from 1 July 2020 set at $10 million, indexed by CPI plus 3%). New registrants pay a prorated amount for part-year registration. The charge targets insurers, not policyholders, and funds prudential supervision."},"flash_summary":{"complexity_score":5,"scope_assessment":{"changed":false,"description":"The instrument applies to companies registered under the Life Insurance Act and sets levy mechanics, caps and indexation. The text does not alter the sectoral scope from that expressed definition; it also expressly binds the Crown and extends to external territories (s 5, s 3, s 4, s 7(3))."},"complexity_factors":["Two-component levy with restricted and unrestricted parts and min/max floors for the restricted component (s 7(1), (1A), (1B)).","Treasurer determines percentages, minimums, maximums and levy‑base method by legislative instrument—significant executive discretion and ability to treat classes differently (s 7(3), (6)).","Statutory upper limit that is itself index‑adjusted annually (definition of statutory upper limit in s 5).","Indexation calculation uses quarterly CPI ratios plus a fixed 0.030 uplift and specific rounding rules (s 8(1)–(2)), adding technical arithmetic steps for implementers.","Pro rata formula for entities that become insurers mid‑year creates additional calculation complexity (s 7(2)).","Specific timing rules for the day to measure an insurer’s levy base, with different rules for continuous and new registrants (s 7(5)).","Act binds the Crown and extends to external territories, which affects scope of application and administration (s 3–4)."],"plain_english_summary":"Imposes an annual supervisory levy on life insurance companies (those registered under the Life Insurance Act) to fund prudential supervision. The levy comprises restricted and unrestricted components calculated from each company’s levy base, with pro‑rata adjustment if a company becomes subject mid‑year (s 7).\n\nThe Treasurer sets rates, minimums, maximums and the levy‑base method by legislative instrument (s 7(3)); the statutory cap and CPI‑based indexation rule constrain increases (s 5, s 8). Insurers bear the cost and must calculate and report levy bases by prescribed dates."},"kimi_summary":{"content_quality":"ok","complexity_score":5,"scope_assessment":{"changed":false,"description":"The legislation appears to maintain its original scope as a levy imposition mechanism for life insurance supervision. While it has been amended over time (evidenced by the 2020 statutory upper limit reference and the addition of unrestricted levy components), these changes appear to be refinements within the original purpose rather than scope creep. The core function—imposing a supervisory levy on life insurers—remains unchanged."},"complexity_factors":["Nested conditional logic in section 7 with multiple tiers: restricted vs unrestricted components, each with their own calculation methods, plus minimum/maximum thresholds","Formula-based calculations requiring external data (CPI index numbers from Australian Statistician) with specific rounding rules in section 8","Cross-reference dependency on Financial Institutions Supervisory Levies Collection Act 1998 for collection mechanism","Delegated legislative power to Treasurer to determine 5 separate variables (max/min amounts, two percentages, and levy base methodology)","Date-based conditional triggers for levy imposition day and levy base calculation reference dates (17 March and 14 April references)","Pro-rata calculation formula for companies joining mid-year","Indexation mechanism with 3% fixed add-on to CPI changes"],"plain_english_summary":"This law sets up a system for charging life insurance companies an annual fee (called a 'levy') to help pay for government supervision of their industry.\n\n**Who it affects:**\n- **Life insurance companies** – businesses registered under the Life Insurance Act 1995 that sell life insurance policies\n- **The Treasurer** – who sets the specific dollar amounts and percentages each year\n- **APRA** (the Australian Prudential Regulation Authority) – the government body that collects the levy under a separate law\n\n**What it does:**\n- **Imposes a two-part levy** on life insurance companies every financial year:\n  - A **restricted levy component** – calculated as a percentage of the company's 'levy base' (essentially a measure of its size or business volume), but capped at a maximum amount and guaranteed to be at least a minimum amount\n  - An **unrestricted levy component** – calculated as a percentage of the levy base with no cap\n- **Adjusts for inflation** – the maximum possible levy amount (the 'statutory upper limit') increases each year based on the Consumer Price Index plus 3%\n- **Handles new companies** – if a company becomes a life insurer part-way through the year, it only pays for the portion of the year it was operating\n- **Gives the Treasurer power** to determine the specific percentages, minimum/maximum amounts, and how to calculate each company's 'levy base' through a legislative instrument (a formal government decision)\n\n**Why it matters:**\nThis law ensures life insurers contribute to the cost of their own regulation. The 'restricted' component is capped to protect smaller insurers from excessive costs, while the 'unrestricted' component ensures larger companies pay proportionally more. The inflation adjustment prevents the real value of the levy from eroding over time."}},"importantCases":[],"_links":{"self":"/api/acts/life-insurance-supervisory-levy-imposition-act-1998","history":"/api/acts/life-insurance-supervisory-levy-imposition-act-1998/history","analysis":"/api/acts/life-insurance-supervisory-levy-imposition-act-1998/analysis","conflicts":"/api/acts/life-insurance-supervisory-levy-imposition-act-1998/conflicts","importantCases":"/api/acts/life-insurance-supervisory-levy-imposition-act-1998/important-cases","documents":"/api/acts/life-insurance-supervisory-levy-imposition-act-1998/documents"}}