Draft Taxation Determination

TD 93/D84

Income Tax: does section 129 of the Income Tax Assessment Act 1936 (ITAA) operate to deem 5% of shipping freight payments to be taxable income where;

the payments were made by an Australian resident to an Italian shipping enterprise,
the payments were made for the carriage by ship of passengers, livestock, mail, goods or merchandise from Australia for discharge at an overseas port, and
the place of effective management of the Italian shipping enterprise is in Italy?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 93/89.

FOI status:

draft only - for comment


Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. No. Although the requirements of section 129 are satisfied, under the terms of section 4 of the Income Tax (International Agreements) Act 1953 (IT(IA)A), where the application of the ITAA (other than Section 160AO or Part IVA) would produce a result that is inconsistent with the provisions of the IT(IA)A, the treaty provisions will prevail.

2. Article 8(1), Schedule 21 IT(IA)A (Australia-Italy Double Tax Convention) states that 'Where profits are derived by a resident of one of the Contracting States from the operation of ships and the place of the effective management of the shipping enterprise is situated in that State, those profits shall be taxable only in that State'.

3. Therefore, section 129 of the ITAA does not apply.

Commissioner of Taxation
1 April 1993


BO CANN J5/185/2

ISSN 1038 - 8982

Subject References:
double tax
shipping freight payments
shipping profits

Legislative References:
ITAA 129
IT(IA)A Schedule 21