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  • Voyage types and duty requirements

    The type of voyage an overseas ship is taking is determined by the primary purpose of the trip within Australian waters. Types of voyages are:

    • international voyages
    • domestic voyages, including    
      • short-term disconnections
      • long-term disconnections
      • fully-imported ships.
       

    The type of voyage determines if bunkers will be subject to customs or excise duty or GST.

    Find out about:

    Overseas ship

    An overseas ship is one that is currently making, or about to make, an international voyage. Ships undertaking international voyages include cargo ships, passenger ships and a range of other ships that undertake maritime work.

    An overseas ship may be:

    • an international (foreign) ship owned by a non-resident shipping operator that may or may not perform domestic voyages
    • a resident-owned ship that travels directly overseas or via another Australian port which is incidental to that voyage.

    The residency of the shipping operation is relevant to who has GST obligations and who is entitled to fuel tax credits or input tax credits.

    Overseas ships on international voyages

    An international voyage is a voyage, whether direct or indirect, between a place in Australia and a place outside Australia. A 'place outside Australia' does not include:

    • any area of waters outside Australia
    • installations outside Australia
    • a ship outside Australia
    • a reef or uninhabited island outside Australia
    • waters and installations in the Joint Petroleum Development Area.

    When determining if a ship has undertaken a voyage to a place outside Australia and as a result duty is not payable on the bunker fuel, ‘Australia’ means the Commonwealth of Australia excluding all external territories.

    If a ship travels from an Australian port to a place that is not a 'place outside Australia' before returning to Australia, it has not undertaken an international voyage. As a result, duty is payable on the bunker fuel consumed during this voyage.

    An overseas ship is making a continuing international voyage when it loads or unloads international cargo in an Australian port on arrival from overseas and is in transit to an overseas destination. This also includes legs travelled between Australian ports where international cargo is loaded or unloaded.

    A ship may travel from an Australian port to a foreign port via other Australian ports and still be on an international voyage. However, carrying domestic cargo during that voyage can alter that status and you may need to pay duty on the bunker fuel consumed during this part of the voyage.

    Overseas ships and domestic cargo

    Any domestic cargo loaded or unloaded at an Australian port while the ship is on an international voyage is incidental to the international status of the voyage.

    However, transporting domestic cargo (passengers or goods) between domestic ports can create a disconnection from the international classification of a voyage if the sole purpose of the trip is to load or unload that domestic cargo. Therefore, you may need to pay excise duty, customs duty or GST.

    Ships that conduct survey, construction, oil and gas exploration operations, and similar activities in Australia may interrupt a continuing international voyage and may also have to pay excise duty, customs duty or GST.

    Duty payable on bunkers during international voyages

    Bunkers on an overseas ship engaged in an uninterrupted international voyage are not subject to customs duty or GST on fuel consumed during the voyage. Local bunkers may be acquired without payment of excise duty or GST.

    Example

    Xiang Shipping Lines operates a foreign-owned ship. After arriving in Brisbane from Singapore, it discharges some international cargo and loads domestic cargo for Melbourne. In Melbourne it discharges that domestic and some international cargo, acquires local bunkers and departs for Auckland where it discharges the balance of the international cargo.

    Although domestic cargo was carried between Brisbane and Melbourne, the international voyage was not interrupted as transportation of that domestic cargo was not the sole purpose of the Brisbane-Melbourne leg. Xiang Shipping Lines do not have to pay customs duty and GST on fuel consumed during domestic travel. The bunkers acquired in Melbourne are free of excise duty.

    End of example

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    Domestic legs of international voyages

    An overseas ship is on a domestic voyage when the sole purpose of a leg is to either:

    • load or unload domestic cargo
    • re-position the ship to load or unload domestic cargo for transport to an Australian port.

    A continuing international voyage is temporarily interrupted by short or long-term disconnections and permanently ceased if a ship is fully imported.

    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:

    Fully-imported ship

    A non-resident ship is fully imported when it terminates or indefinitely suspends an international voyage with the intention of remaining and working within Australian waters.

    Duty payable for a fully-imported ship

    Bunkers remaining on a fully-imported ship that has completed its international voyage are subject to the following GST, customs and excise duty implications:

    • bunker fuel on board on importation of the ship is liable for customs duty and GST
    • bunkers subsequently acquired for domestic use are subject to payment of excise duty and GST
    • fuel tax credits and input tax credits may be claimed on duty-paid bunkers in accordance with rules on agency and other eligibility requirements.

    Different rules apply to transactions involving a resident agent.

    See also:

      Last modified: 03 Apr 2017QC 22910