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Ian Farmer, PwC |
On February 20 2012, the government released draft legislation for a range of proposed tax incentives for the shipping industry. The proposals are relevant for both ship owners (for example, lessors) and ship owner/operators.
The incentives aim to make the Australian shipping industry more internationally competitive, facilitate Australian competition on international routes and increase the attractiveness of the industry to investors.
The five tax incentives proposed are:
An income tax exemption for Australian operators of certified vessels on income from core shipping activities, which includes carrying shipping cargo or shipping passengers, crewing the vessel, and loading cargo onto the vessel. Income from activities incidental to the core shipping activities will also be exempt where it comprises less than 0.25% of the income from core shipping activities;
Accelerated depreciation deductions for holders of certified vessels, with the effective life of certified vessels capped at 10 years. This incentive will be available to both owners (for example, lessors) and owner/operators of certified vessels. However, where an owner/operator's income from operating the vessel is exempt under the shipping income tax exemption, depreciation deductions will not be available to the owner/operator;
A refundable tax offset for employers of eligible Australian seafarers, where the seafarer is employed by the company claiming the offset on overseas voyages made by certified vessels for at least 91 days in the income year;
Balancing adjustment and roll-over relief for gains on disposal of eligible vessels. Similar to the accelerated depreciation measure, this roll-over relief will not be available where the taxpayer's income from operating the vessel is exempt under the shipping income tax exemption; and
An exemption from royalty withholding tax for non-resident owners of eligible vessels leased on a bareboat basis to an Australian operator.
The proposed tax incentives will be available to holders of a shipping exempt income certificate in relation to eligible vessels. An eligible vessel is one that is:
Registered under either Australia's primary or international shipping registers; and
More than 500 gross tonnes (cargo vessels between 200 and 500 gross tonnes may be eligible if primarily used in regional or remote Australia).
Certain types of vessels are specifically excluded.
Ian Farmer (ian.farmer@au.pwc.com)
PwC
Tel: +61 2 8266 2802
Fax: +61 2 8286 2802
Website: www.pwc.com/au
