Jul 1, 2012

Landmark Shipping Tax Reforms Kick In Today

The Federal Labor Government’s landmark shipping reforms, which commence today, include the establishment of an Australian International Shipping Register (AISR) – an Australian first.

The AISR is designed to promote investment in Australia’s involvement in international shipping.

99.9 per cent of Australia’s cargo trade is moved by ships, making it the 4th largest shipping task in the world and yet, Australia has only 4 international trading vessels.

The Government’s view is that a competitive and growing domestic shipping industry is in Australia’s long term national interest.

From today, companies which place vessels on the AISR will receive the government’s zero tax rate, the seafarer tax exemption (where companies do not have to pay employee income tax) and other fiscal incentives in the government’s shipping reform package, including:

  • provision for accelerated depreciation of vessels via a cap of 10 years to the effective life of  those vessels;
  • rollover relief from income tax on the sale of a vessel; and
  • an exemption from royalty withholding tax for payments made for the lease of a shipping vessel

In addition to reducing the cost of owning and operating an Australian ship, under the government’s shipping reforms AISR vessels on international voyages will pay international wages and conditions as set by the International Transport Federation. AISR vessels will be able to hire foreign seafarers; though the master and chief engineer have to be Australian.

Together, these tax arrangements ensure investment in Australian shipping will continue.

The combination of a zero tax rate and internationally competitive employment conditions means AISR vessels can compete on an equal playing field with international ships, without reducing Australia’s enviable maritime safety standards.

The government’s creation of an AISR means we will see Australian ships with an Australian flag on the back working in the great ports of the world, something that all Australians can take great pride in.