There are a range of tax incentives that may be available in respect of operations associated with the Australian shipping industry. The incentives are designed to encourage investment in the Australian shipping industry and to encourage the development of sustainable employment and skills opportunities for Australian seafarers. They are:
- Shipping Exempt Income tax incentive for Australian operators of Australian registered eligible vessels on qualifying shipping income;
- Accelerated depreciation and rollover relief for Australian corporate owners of Australian registered eligible vessels;
- Seafarer Tax Offset for Australian corporate employers who employ eligible Australian seafarers on overseas voyages performed by Australian registered eligible vessels; and
- Exemption from royalty withholding tax for foreign owners of eligible vessels leased under a bareboat or demise charter to an Australian resident company.
Eligibility for the first three incentives is dependent on a certificate being issued for the vessel under the Shipping Reform (Tax Incentives) Act 2012; further, to claim a Shipping Exempt Income tax incentive, the certificate needs to be a Shipping Exempt Income certificate (i.e. it must specify particular matters that evidence the Australian company's compliance with training and management requirements). The basic process for being issued a certificate is outlined in the diagram below:
- An Australian company (usually the operator of an Australian registered eligible vessel) applies for the issuance of a notice under the Shipping Reform (Tax Incentives) Act 2012 in respect of the vessel. A notice is applied before the end of the income year for the current income year and is only relevant for the first income year an Australian company wishes to apply for a certificate. The company would apply for a notice under the Shipping Reform (Tax Incentives) Act 2012 if:
- it wanted its certificate (and therefore its tax incentive) to cover a period that extends earlier than the last three months of the first income year; or
- it wanted assurance, prior to the end of the income year, that it has met the eligibility requirements for a certificate to be issued under the Shipping Reform (Tax Incentives) Act 2012.
- A certificate is necessary to obtain the first three tax incentives listed above. The certificate is applied for after the end of the income year (and thus covers the previous income year). The first certificate that is issued to a company will only apply for the last three months of the first income year (unless the company has also applied for and received a notice under the Shipping Reform (Tax Incentives) Act 2012 for the eligible vessel).
- Subsequent certificates are obtained after the end of each income year.
- Certificates apply per applicant, per vessel, per income year.
Once a certificate is issued, the relevant tax incentives are claimed via a company tax return submitted to the Australian Tax Office (ATO). Additional criteria for each of the incentives are contained in the IncomeTax Assessment Act 1997 and theIncome Tax Asessment Act 1936 (as amended by the Tax Laws Amendment (Shipping Reform) Act 2012), which are administered by the ATO.
However, it should be noted that regardless of the activities in which a vessel is engaged, excluded vessels (see subsection 10(4) of the Shipping Reform (Tax Incentives) Act 2012) cannot qualify for a notice or a certificate. Tugboats and offshore industry vessels are two examples of vessels that are excluded under the Shipping Reform (Tax Incentives) Act 2012.
Regulator Performance Framework
The Regulator Performance Framework was developed in late 2014 to support Australian Government regulators to measure and improve their performance. In July 2021 the Regulator Performance Framework was replaced by the Regulator Performance Guide, further information can be found here.
Please see the following assessment report for Shipping Tax Incentives against the Regulator Performance Framework indicators for the reporting period 2020-2021. This is the final report that will be made under the Regulator Performance Framework.
Contact Details for Information on Tax Incentives
Tasmanian and Shipping Programs Section
Maritime and Shipping Branch
Department of Infrastructure, Transport, Regional Development and Communications
GPO BOX 594, Canberra, ACT, 2601