Eligibility Requirements for Certificates and Notices
The Shipping Reform (Tax Incentives) Act 2012, provides the mechanism for Australian companies to obtain a certificate (and, if relevant, a notice) for an eligible vessel undertaking qualifying activities as a necessary step towards gaining access to a range of taxation incentives.
A notice or certificate can only be issued for an income year where during the income year an eligible vessel was used, was available for use, will be used or will be available for use, wholly or mainly for business or commercial activities involving carrying shipping cargo, or shipping passengers, on voyages.
Shipping cargo is defined to mean any personal property:
- that is carried on board a vessel under a contract; or
- that is carried on board a vessel, and for which a bill of lading, or a receipt of a similar kind, is issued.
Shipping passenger is defined to mean a person carried on board a vessel with the knowledge or consent of the owner, charterer or master of the vessel, other than:
- a person employed or engaged in any capacity on board the vessel by the business operating the vessel; or
- a person on board the vessel:
- under an obligation imposed on the owner, charterer or master by any law (including a law of a country other than Australia); or
- because of circumstances that could not have been prevented by the owner, charterer or master.
These definitions also establish what constitutes shipping activities that may come within the Shipping Exempt Income tax incentive.
A certificate or a notice under the Shipping Reform (Tax Incentives) Act 2012 can only be issued for a vessel if the vessel is eligible. For a vessel to be eligible it must:
- be registered in either the Australian General Register or the Australian International Shipping Register;
- have a tonnage certificate issued by the Australian Government that states the vessel is over 500 gross tonnes. If the tonnage of the vessel is between 200 and 500 gross tonnes, the Minister must also be satisfied that during the income year the vessel has been, or will be, used wholly or mainly for carrying shipping cargo to, from or within regional or remote Australia; and
- not be an excluded vessel. Generally, vessels that are not part of the ‘blue water fleet’ are excluded vessels. The following are excluded vessels under subsection 10(4) of the Shipping Reform (Tax Incentives) Act 2012:
- recreational vessels;
- fishing vessels and fishing fleet support vessels;
- offshore industry vessels;
- inland waterways vessels;
- salvage vessels;
- vessels operating wholly or mainly within a harbour;
- vessels operating wholly or mainly from a stationary position;
- government vessels; and
- vessels owned or operated by:
- the Australian Defence Force; or
- the defence force of another country
Some of the excluded categories are defined further in the Shipping Reform (Tax Incentives) Act 2012. In particular, the following definitions may be helpful in assessing whether a vessel is an eligible vessel.
Fish includes turtles, dugong, crustacean, molluscs and any other living resources of the sea or of the seabed.
Fishing fleet support vessel means a vessel used wholly or mainly in activities in support of the fishing operations of a fishing vessel.
Fishing operations means:
- the taking, catching or capturing of fish for trading or manufacturing purposes; and
- the processing or carrying of the fish that are taken, caught or captured.
Fishing vessel means a vessel used wholly or mainly for fishing operations.
Government vessel means a vessel:
- that belongs to any of the following entities (a government entity):
- the Commonwealth, a State or Territory;
- a body corporate (other than a constitutional corporation) established for a public purpose under a law of the Commonwealth, a State or Territory; or
- the beneficial interest in which is vested in a government entity; or
- that is for the time being demised or sub-demised to, or in the exclusive possession of, a government entity.
Harbour means a natural or artificial harbour, and includes an estuary, navigable river, creek, channel, dock, pier, jetty, offshore terminal or other place in or at which vessels can load and unload goods or embark and disembark passengers.
Inland waterways vessel means a vessel (other than a government vessel) that is used wholly in waters other than waters of the sea.
Offshore industry vessel means a vessel that is used wholly or mainly in, or in any operations or activities associated with or incidental to, exploring or exploiting the mineral and other non-living resources of the seabed and its subsoil.
Recreational vessel means a vessel used wholly for recreational or sporting activities (whether or not let, or intended to be let, for consideration).
Salvage operation means any act or activity undertaken to assist a vessel or any other property in danger in any waters.
Salvage vessel means a vessel that is used wholly or mainly for salvage operations.
The Minister may, by legislative instrument, specify kinds of vessels that are to be or not to be excluded vessels.
If you are unsure if your vessel is eligible for a certificate or a notice under the Shipping Reform (Tax Incentives) Act 2012, you can contact the Department on 1800 005 221 or by emailing email@example.com to seek advice before completing a notice or certificate application form.
Please note that the email contact address for tax incentives has changed to firstname.lastname@example.org. Tax incentives queries or applications sent to the old email address will only be monitored until close of business 30 May 2017. After this date, the new email address (email@example.com) will need to be used for all applications and queries relating to tax incentives.