An Australian company is eligible for a refundable tax offset (a seafarer tax offset) for salary, wages and allowances (withholding payments) paid to Australian resident seafarers who are employed to undertake overseas voyages on any eligible vessel for which a certificate under the Shipping Reform (Tax Incentives) Act 2012 is issued (certified vessel), if the company employs the seafarer on such voyages for at least 91 days in the income year.

Accelerated depreciation means that the effective life of an eligible vessel is capped at 10 years for an Australian company that has been issued with a certificate under the Shipping Reform (Tax Incentives) Act 2012 in respect of the vessel (certified vessel). The decline in value of the depreciating asset (the certified vessel) will therefore be calculated over a shorter period of time, providing companies with a greater deduction in the earlier income years.

A key goal of the shipping exempt income tax incentive is to attract existing vessels and newer vessels to be registered in Australia. Under this tax incentive, certain income generated from shipping activities of eligible vessels may be exempt from income tax under section 51-100 of the Income Tax Assessment Act 1997 if certain criteria are satisfied.

Consolidated information on the number of certificates and notices issued in the 2024 calendar year under the Shipping Reform (Tax Incentives) Act 2012 by the Department is provided in the tables below. Please note that there can be multiple types of tax incentives sought per application. Out of the 23 certificates issued in the 2024 calendar year, 14 were for income tax exemption, four were for refundable tax offset, and five were for accelerated depreciation.

The Shipping Reform (Tax Incentives) Act 2012 provides the mechanism for Australian companies to obtain a certificate (and, if relevant, a notice for the first income year) for an eligible vessel undertaking qualifying activities as a necessary step towards gaining access to a range of taxation incentives.

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 the Shipping Reform (Tax Incentives) Regulations 2023.

A completed application form for a notice is to be submitted to the Department at least three months before the end of the income year for which the applicant intends to seek access to a tax incentive through the Australian Tax Office (ATO). A notice is required for new applicants to claim a tax incentive for a full year for the first income year. In the absence of a notice, any certificate issued to first time applicants will only cover the last three months of the income year.