Guidelines for collection and refund of the Motor Accidents Fund Levy and Lifetime Care and Support Fund Levy effective from 1 May 2014.
These guidelines are issued pursuant to sections 214A and 214AA (2) of the Motor Accidents Compensation Act 1999 (MACA) and pursuant to sections 51 and 51A (2) of the Motor Accidents (Lifetime Care and Support) Act 2006 (LTCSAA) and replace the Guidelines issued with effect from 1 May 2011.
Any reference in these guidelines to the MCIS Levy is a reference to the combined total of the Motor Accidents Fund Levy and the Lifetime Care and Support Fund Levy.
1. Levy collection
In accordance with section 214A of MACA and with section 51 of LTCSAA, the Fund Levy applicable in respect of the relevant legislation is to be collected by CTP insurers on behalf of the Motor Accidents Authority (MAA) and the Lifetime Care and Support Authority (LTCSA). The Fund Levy is to be collected in conjunction with the payment of the premium for the policy, from the person to whom a third-party policy is issued, by the insurer who issues the policy. The levy is to be calculated from the inception date for that policy at the rate notified to insurers from time to time on the premium payable in respect of that policy.
Fund Levies are to be paid to the MAA and LTCSA no later than the 14th day of the month following the calendar month in which the Fund Levies were collected (less any refunds made to third-party policy holders in the same calendar month) e.g. any Fund Levies collected in the month of May 2014 are to be paid no later than 14 June 2014.
2. Levy refund
These guidelines apply in respect to:
- the refund to be made to any person to whom a third-party policy was issued (or their authorised agent) if the policy is cancelled on the cancellation of the registration of the motor vehicle to which the policy relates (except where the registration is cancelled under Division 3 of Part 4 of the Fines Act 1996)
- any other refunds to be made when a Green Slip has not been used or where an adjustment is made to a premium paid.
For the purposes of making levy refunds, the person to whom a third-party policy was issued is taken to be the person who is the registered operator of the vehicle (as defined in the Road Transport (Vehicle Registration) Act 1997) at the date upon which cancellation of the registration of that vehicle became effective.
These guidelines are to be read in conjunction with the Business Rules as they apply and are amended from time to time.
Refunds are to be made in accordance with Schedule A.
3. Calculation of refund
These guidelines apply in respect of the cancellation of a vehicle registration on and from 1 October 2009 irrespective of the date upon which the policy was issued.
An insurer is to refund to the registered operator (or their authorised agent) an amount calculated on the basis of the number of days for which the policy remains unused. The date from which the policy is considered to be cancelled is the date upon which cancellation of registration of the vehicle to which the policy relates became effective.
The day upon which the cancellation of registration of the vehicle to which the policy relates became effective, is not to be included in the number of days left to run on the policy for the purposes of calculating the refund.
The refund is to be calculated by using the following method (M ÷ Y) x D where:
- M is the amount of the levy paid in respect of the policy issued against that vehicle.
- Y is the number of days for which the policy was issued.
- D is the number of days left to run on the policy after registration was cancelled.
4. Issuing refunds
A. The insurer that issued the policy is to make the necessary refund to the registered operator (or their authorised agent) within 14 days of receiving both:
- a request in writing from the registered operator (or their authorised agent), and
- evidence indicating that registration has been cancelled which includes the date upon which cancellation of registration of the vehicle to which the policy relates became effective, or
- in the case of interstate surrenders, the operator presents a copy of a Roads and Maritime Services (RMS) letter confirming cancellation of the NSW registration and/or copies of the receipt for surrender of the NSW number plates interstate and the registration certificate from the interstate authority. The receipt must show the date the plates were handed in interstate, or
- in the case of interstate surrenders where there has been a transfer of ownership but the new owner has not notified RMS, the new owner presents a copy of the receipt for surrender of the NSW number plates and the registration certificate in the name of the new operator from the interstate authority. The refund is to be made to the new owner/operator as stated on the new registration certificate from the interstate authority. The receipt must show the date the plates were handed in interstate.
In making a refund of the MCIS Levy an insurer is not to make any deductions for administrative or other costs.
In circumstances where the levy amount relating to the cancelled policy was previously forwarded to the Finance and Services Division, Safety, Return to Work and Support (SRWS) in accordance with section 214A (3) of MACA or section 51(3) of LTCSAA, the insurer will be entitled to a refund from the Authorities of any amount refunded. Any such refund is to be set-off against the fund levy collected in the month in which the refund was made.
B. When making a refund of the levy, the insurer is to provide to the registered operator (or their authorised agent) a refund notification setting out:
- the name of the registered operator
- the date on which the policy was incepted
- the amount of the MCIS levy paid on the issue of the policy
- the date upon which cancellation of registration of the vehicle to which the policy relates became effective
- the full amount of the MCIS Levy refund.
5. Remittance and returns
In order to enable and facilitate effective monitoring, refunds and adjustments need to be shown separately (aggregated) in monthly remittance advices, Quarterly Premium Returns (QPR’s) and annual audited returns. Gross collections must be shown with no netting off refunds or adjustments.
Insurers are to supply the Finance and Services Division (SRWS) with a monthly levy remittance for each calendar month no later than the 14th day of the month following the calendar month in which the Fund Levies were collected i.e. monthly remittances are to be provided at the same time as payments are made to the respective Authorities. The remittances are to be in Excel format as set out in Attachment B to these guidelines.
Insurers are to supply the Finance and Services Division (SRWS) with quarterly levy returns for each quarter no later than the 14th day of the month following the last day of the quarter in which the Fund Levies were collected. The returns are to be in Excel format as set out in Attachment B to these guidelines. A description of the columns in the template is included as Attachment C and will be updated and amended as required, for example, on the introduction of a new levy rate.
The returns are to show at a summary level for each month a reconciliation of the above accounts.
6. Compliance audit
A. For each financial year 1 July to 30 June, insurers are required to provide by no later than 8 August following the end of the year, an Independent Auditor Report on Compulsory Third Party Premium Return collected and MCIS Levies passed to Government, as described in the [NSW] Motor Accidents Compensation Act 1999.
B. The Auditor is required to be independent and accredited [registered as a company auditor with Australian Securities and Investments Commission] and appointed by the insurer to audit in accordance with Australian Auditing and applicable Accounting Standards, to provide the Authority with reasonable assurances that, during the year:
- the correct and verified amount of premium was collected
- the correct Medical Care and Injury Services [MCIS] Levy rates were applied
- the correct MCIS Levy was collected and remitted to Government
- the correct rate was applied to any MCIS levy refunded to policy holders and claimed from Government
- there operated effective internal controls, including reconciliation effort, over the systems that collect, record, verify and report on MCIS Levy transactions.
C. The Auditor should rely on the current Framework for Assurance Engagements as issued and updated by the Australian Government Auditing and Assurance Standards Board.
First issued on 3 July 2006 with effect from 1 October 2006
Revised: 1 October 2009, 1 April 2010, 1 May 2011, 1 May 2014
Andrew Nicholls, General Manager, Motor Accidents Authority
Don Ferguson, General Manager, Lifetime Care and Support Authority
Fund Levy refund and recovery rules
|Item No||Action||Refund to customer||Recovery from MCIS Levy|
Registration cancellation – General
|Pro-rata refund||Pro-rata recovery|
|2||Registration cancelled – under Division 3 of Part 4 of the Fines Act 1996||No||No|
|Pro-rata refund||Pro-rata recovery|
|Pro-rata refund||Pro-rata recovery|
|6||Green Slip not used||Full refund||Full recovery|
|7||Green Slip used but registration cancelled prior to registration start date||Full refund||Full recovery|
|8||Premium adjustment – effective from policy inception date||Plus/minus pro-rata||Plus/minus pro-rata|
|9||Premium adjustment – effective later than policy inception date||Plus/minus pro-rata||Plus/minus pro-rata|
Attachments B & C
Attachments B & C are available for download in Microsoft Word format.