Additional Requirements for ITE
To qualify for the Income Tax Exemption (ITE) incentive, an applicant must satisfy two additional requirements, the management and training requirements, as set out in the Shipping Reform (Tax Incentives) Regulations 2012. These are detailed below:
- the applicant conducts crew management in Australia, and
- at least one of the following activities are conducted in Australia
- strategic management,
- commercial management,
- or technical management.
Crew Management (whether conducted by a third party or not) would include:
- Sourcing, employing, paying and managing the crew of a vessel.
Evidence of having crew management take place in Australia could be details of the company that is undertaking the crew management and an extract of the contract between the applicant and its crew management company which would then include 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 must hold a copy of the operator's certificate.
Strategic management focuses on management and control decisions that guide and control the company's business activities in Australia. It involves:
- the decision making processes, for example company matters such as general policies and strategic directions, major agreements and significant financial matters; and
- activities such as the monitoring of the company's overall corporate performance and the review of strategic directions made in the light of the company's performance.
Evidence of having strategic management take place in Australia could be details of where and when strategic management activities took place or a description of the activities that take place in Australia.
Commercial management is the task of finding employment for the vessel and could include:
- Route planning
- Taking bookings for cargo or passengers
- Provisioning and victualling requirements
Evidence of having commercial management take place in Australia could be details of contracts or a description of the activities that take place in Australia.
Technical management involves the day to day running of a vessel and could include:
- Supervising the repair and maintenance of vessels, including decisions on dry docking and wet docking
- Managing the fuelling of vessels and other provisions
- Safety management
Evidence of having technical management take place in Australia could be details of the company's safety management plan or a description of the activities that take place in Australia.
When applying for a certificate in accordance with Part 2, para 8(2) (b) of the Shipping Reform (Tax Incentives) Act 2012, an entity must demonstrate that it had in place a training plan for the previous income year which maintained 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, deck officer training and integrated ratings and steward training.
The minimum requirement can be met by, for example, an operator with six vessels having 18 trainees that are spread over the 6 vessels—there does not necessarily have to be strictly 3 on each vessel.
Unless the trainee is a steward, the qualification must be an Australian Maritime Safety Authority (AMSA) approved qualification and undertaken at an AMSA approved organisation.
A training plan for proposed entry into the income tax exemption regime must include the following elements to enable a company to satisfy the training requirement set out above:
- name and details of the applicant (or where the training is to be undertaken by a third party, the name and details of that third party),
- trainee details, i.e. age, sex and classification for each of the three categories of employees: engineer officers, deck officers and integrated ratings,
- description of the training to be undertaken—name of the qualification the trainee is seeking to attain, name of the registered training organisation, and expected timeframe for completion of the qualification,
- where applicable, evidence the training is approved by AMSA,
- any qualifications already held, and
- details of how the training plan is to be monitored by the applicant for the purposes of its participation in the income tax exemption regime.