• Short-term voyage disconnection

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

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

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

    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:

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

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

    Duty payable on bunkers during short-term and long-term disconnections

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

    • Imported bunker fuel consumed during the domestic leg(s) of a short-term disconnection is subject to customs duty and GST and is payable at the completion of the short-term disconnection. For a long-term disconnection duty-free bunkers on board at the start of the long-term disconnection must be entered into home consumption.
    • Local bunker fuel acquired while the ship is on a domestic voyage is subject to excise duty and GST and is payable at the time of acquisition.
    • 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 a resident 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 for a resident shipping operator only, even if the fuel is acquired or imported through a resident shipping agent.
       

    Example short-term disconnection Nolan Shipping operates a foreign-owned ship. After arriving in Brisbane from Hong Kong, it discharges some international cargo and accepts a spot charter to transport domestic cargo from Brisbane to Sydney and Melbourne. After unloading that cargo in Melbourne it departs for Auckland where it discharges the balance of the international cargo.

    Although it has international cargo on board none of it was unloaded in Sydney or Melbourne and no international cargo was loaded at either port. As a result the two legs conducted between Brisbane and Sydney and Sydney and Melbourne have interrupted the international voyage and are a short-term disconnection to that voyage. The sole purpose of those legs was to transport domestic cargo.

    Nolan Shipping must pay customs duty and GST on fuel consumed during that domestic travel. A fuel tax credit may be claimed on customs duty paid, see Fuel tax credits - business.

    End of example

     

    Example long-term disconnection

    Gvoski Shipping Lines, a non-resident shipping operator owns and operates the MV Belinz. After discharging its international cargo in Brisbane, it loads domestic 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. There is no international cargo loaded or unloaded during the Brisbane to Fremantle leg of the voyage.

    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 bunker fuel consumed during that domestic transport because the sole purpose of the voyages was to transport domestic cargo. Bunker fuel 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. If there is no entitlement to a fuel tax credit a refund of duty may be claimed, see Refunds of duty.

    End of example

    When an overseas ship resumes an interrupted international voyage, a refund of duty paid cannot be claimed on the remaining bunker fuel if there is an entitlement to claim fuel tax credits. Refunds of duty are generally only payable to non-resident shipping operators that are not registered or required to be registered for GST.

    See also:

      Last modified: 02 Jun 2015QC 22910