Tax Incentives Available to Ship Operators

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).

1. Applicant seeks in first year a notice establishing it will likely meet the qualifying conditions;

2. The Department assesses evidence issues Notice if conditions are met;

3. Applicant required to obtain certificate from the Department at least 30 days before lodging tax return;

4. Certificate required annually which will include some reporting. 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).