To qualify for the shipping exempt income tax incentive, an applicant must have a shipping exempt income certificate issued under the Shipping Reform (Tax Incentives) Act 2012. To obtain such a certificate, the applicant must satisfy two additional requirements, the management and training requirements, as set out in theShipping Reform (Tax Incentives) Regulations 2023..
The management requirements to qualify for the shipping exempt income notice or certificate are set out in section 7 of the Shipping Reform (Tax Incentives) Regulations 2023. These requirements are that:
- the applicant must conduct crew management in Australia, and
- the applicant must conduct at least one of the following activities in Australia:
- strategic management
- commercial management
- technical management.
Crew management functions (whether or not conducted by a third party) involve:
- recruiting and employing persons as crew of a vessel
- paying the crew of a vessel
- otherwise managing the crew of a vessel.
Examples of evidence of having crew management take place in Australia include details of a third party undertaking the crew management for the applicant and an extract of the contract between the applicant and the crew management company which includes details of how the crew management company's activities take place in Australia.
Note: If the crew management company proposes to access the seafarer refundable tax offset it will also need a copy of the seafarer refundable tax offset certificate issued for the relevant vessel.
Strategic management consists of managing, and making decisions that guide and control, the company's business activities in Australia. It includes:
- making decisions about general policies and strategic directions, contract agreements and financial matters, and
- the monitoring of the company's overall corporate performance and the review of strategic directions in light of the company's performance.
Examples of evidence of having strategic management take place in Australia include details of where, when and by whom, strategic management activities of the company were undertaken or took place, or a description of such activities that take place in Australia.
Commercial management is management of the commercial activities of the vessel and could include:
- planning routes
- taking bookings for cargo or passengers
- procuring insurance
- managing finances
- managing charter arrangements.
Examples of evidence of having commercial management take place in Australia include details of relevant contracts, or a description of such activities that take place in Australia.
Technical management involves managing the day to day operations of a vessel and could include:
- supervising the repair and maintenance of vessels, including decisions on dry docking and wet docking
- organising and managing the fuelling of vessels and other provisions
- managing safety on board the vessel.
Examples of evidence of having technical management take place in Australia include details of the company's safety management plan, or a description of such activities that take place in Australia.
When applying for a shipping exempt income notice or certificate under the Shipping Reform (Tax Incentives) Act 2012, a company must demonstrate that it has in place during the relevant period a training plan which maintains a minimum of one person per ship during that year (or the part of the year during which the exemption is claimed) undertaking training in each of the following three categories:
- engineer officer training—training to be a person who is responsible for the propulsion and operating systems of the vessel
- deck officer training—training to be a person who carries out duties in relation to the navigation and operation of a vessel and is responsible for receiving, discharging and caring for cargo or passengers during a voyage
- integrated rating and steward training—training to be a person who carries out duties to support the navigation and operation of a vessel.
Some flexibility is provided to operators of multiple vessels in that trainees can be spread across a number of vessels. For example:
- If a company operates two vessels, the company must ensure that training is being undertaken by at least six trainees (with two trainees in each of the three categories), but there may be four trainees on one vessel and two trainees on the other
- If a company operates six vessels, the minimum requirement can be met by having 18 trainees that are spread over the six vessels—there does not necessarily have to be strictly three trainees on each vessel.
The qualification must be an Australian Maritime Safety Authority (AMSA) prescribed qualification undertaken at an AMSA approved organisation. A prescribed qualification means a qualification, competency, proficiency or standard prescribed by an instrument made for the purposes of subsection 29(2) of the Navigation Act 2012.
A training plan must include the following elements to enable a company to satisfy the training requirements:
- name and details of the applicant (or where the training will be organised by a third party, the name and details of that third party)
- trainee details—the name, age and gender of the trainee, the training category, and any relevant prescribed qualifications already held by the trainee
- description of the training to be undertaken—name of the prescribed qualification the trainee is seeking to attain, name of the training organisation conducting the training, expected timeframe for completion of the prescribed qualification, and where applicable, evidence the training is approved by AMSA
- details of how the training plan is to be monitored.