House of Representatives

Tax Laws Amendment (Shipping Reform) Bill 2012

Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

General outline and financial impact

Stronger Shipping for a Stronger Economy - taxation measures

This Bill amends the Income Tax Assessment Act 1997 , the Income Tax Assessment Act 1936 and the Taxation Administration Act 1953 to provide taxation incentives to stimulate investment in, and revitalisation of, the Australian shipping industry and to foster the global competitiveness of the shipping industry.

The key elements contained in this Bill are:

an income tax exemption for ship operators (Schedule 1);
accelerated depreciation of vessels via a cap of 10 years to the effective life of those vessels (Part 1 of Schedule 2);
roll-over relief from income tax on the sale of a vessel (Part 2 of Schedule 2);
an employer refundable tax offset (Schedule 3); and
an exemption from royalty withholding tax for payments made for the lease of shipping vessels (Schedule 4).

This Bill also provides for the disclosure of tax information by the Australian Taxation Office in certain circumstances (Schedule 5).

Date of effect : These amendments will commence on 1 July 2012.

Proposal announced : The Minister for Infrastructure and Transport, announced a package of shipping reforms, Stronger Shipping for a Stronger Economy , in Media Release AA169/2011 of 9 September 2011.

Reform of the existing arrangements for the shipping industry was first contemplated in 2008, when the Parliamentary Committee on Infrastructure, Transport, Regional Development and Local Government inquired into coastal shipping and advised on ways of making it more competitive and sustainable.

Financial impact : The estimated financial impact is $254.5 million over the forward estimates.

2012-13 2013-14 2014-15 2015-16
$49m $66.8m $68.7m $70m

Human rights implications : This Bill does not raise any human rights issue. See Chapter 7 - Statement of Compatibility with Human Rights .

Compliance cost impact : Low.

Summary of regulation impact statement

The Regulation Impact Statement, entitled Reforming Australia's Shipping (Stronger Shipping for a Stronger Economy ), is available at The Regulation Impact Statement was prepared by the Department of Infrastructure and Transport, and was assessed as adequate by the Office of Best Practice Regulation.

Regulation impact on business

This Bill will have a positive impact on shipping operators as it delivers taxation incentives to encourage investment in Australian ships and skills development.

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