Bunker fuel and commercial shipping

Long-term voyage disconnection

A long-term disconnection consists of domestic voyages of more than three legs by an overseas ship where the sole purpose is either to:

re-position the ship to collect or unload domestic cargo
transport domestic cargo between Australian ports.

The domestic voyage ceases after the domestic cargo is unloaded and the ship resumes its international voyage.

Duty payable on bunkers during long-term disconnections

Fuel consumed during long-term disconnections is subject to the following duties, taxes and credits:

Imported bunker fuel consumed during the domestic leg(s) is subject to customs duty and GST.
Duty free bunkers on board at the commencement of the long-term disconnection must be entered into home consumption.
Local bunkers acquired while the ship is on a domestic voyage is subject to excise duty and GST and is payable at the time of acquisition.
Upon completion of its domestic voyage, bunkers may be acquired free from excise duty and GST if it can be shown that they are acquired for the purpose of resuming an international voyage.
Duty paid on bunker fuel imported or acquired

is eligible for fuel tax credits and GST input tax credits for the agent if acquired or imported through the agent acting on behalf of a non-resident shipping operator
may be eligible for fuel tax credits and GST input tax credits for the non-resident shipping operator if acquired or imported directly - the non-resident shipping operator must be registered for both GST and fuel tax credits to claim
is eligible for fuel tax credits only for a resident shipping operator even if the fuel is acquired or imported through a resident shipping agent.

Example 3:

Gvoski Shipping Lines, a non-resident shipping operator operates the MV Belinz. After discharging its international cargo in Brisbane, it loads cargo for Sydney, Melbourne, Whyalla and Fremantle. In Fremantle it discharges the remaining domestic cargo, uploads bunker fuel and other cargo before proceeding to Cape Town.

The legs between Brisbane and Fremantle are a long-term disconnection of its international voyage. Gvoski Shipping Lines must pay customs duty and GST on fuel consumed during that domestic transport because the sole purpose of the voyages was to transport domestic cargo. Bunkers may be acquired free of excise duty in Fremantle as the ship is resuming its international voyage. A fuel tax credit may be claimed on customs duty paid, see Fuel tax credits.

When an overseas ship resumes an interrupted international voyage, a drawback of duty paid cannot be claimed on the remaining bunker fuel if you are entitled to claim fuel tax credits.

For more information about registering for GST and fuel tax credits, refer to Fuel tax credits for business (NAT 14584).

Sections within Voyage types and duty requirements

Last Modified: Friday, 28 January 2011