Australia Consults On Maritime Tax Overhaul

by Mary Swire, Tax-News.com, Hong Kong

22 February 2012

The Australian government has released for consultation an exposure draft on proposed legislation that would revamp the nation's maritime tax policy to strengthen the industry's international competitiveness.

The Stronger Shipping for a Stronger Economy package, pledged as part of the government's election campaign in August 2010, has four key elements:

• Tax reforms to stimulate investment in Australian shipping and to foster the global competitiveness of the shipping industry;
• A simplified three-tier licensing framework for participation in coastal trade;
• The establishment of an Australian International Shipping Register to put Australian companies on a level footing with their international competitors; and,
• The establishment of a Maritime Workforce Development Forum to progress key maritime skills and training priorities.

The latest consultation would give effect to the tax component of these reforms. Namely, the legislation would introduce:

• An income tax exemption for ship operators;
• Add provisions for accelerated depreciation of vessels via a cap of 10 years to the effective life of those vessels;
• Introduce roll-over relief from income tax on the sale of a vessel;
• Introduce an employer refundable tax offset; and
• Introduce an exemption from royalty withholding tax for payments made for the lease of shipping vessels.

It is anticipated that, if adopted, the changes would come into effect on July 1, 2012.

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