Tax Laws Amendment (Shipping Reform) Act 2012 (57 of 2012)

Schedule 1   Exempt shipping income

Income Tax Assessment Act 1997

4   At the end of Division 51

Add:

51-100 Shipping

(1) An entity’s *ordinary income *derived during an income year (the present year ), or *statutory income for the present year, is exempt from income tax to the extent that it is from *shipping activities that:

(a) relate to a vessel for which the entity has a *shipping exempt income certificate for the present year; and

(b) take place on a day (a certified day ) to which the certificate applies.

Note: For the days to which the certificate applies, see subsection 8(5) of the Shipping Reform (Tax Incentives) Act 2012.

(2) Subsection (1) does not apply to *ordinary income *derived from, or *statutory income from, *incidental shipping activities relating to the vessel if:

Total incidental shipping income > 0.25% of total core shipping income

where:

total core shipping income means the sum of the entity’s:

(a) *ordinary income *derived from *core shipping activities relating to the vessel on the certified days (see paragraph (1)(b)); and

(b) *statutory income from those activities on those days.

total incidental shipping income means the sum of the entity’s:

(a) *ordinary income *derived from *incidental shipping activities relating to the vessel on the certified days (see paragraph (1)(b)); and

(b) *statutory income from those activities on those days.

51-105 Shipping activities

Shipping activities are *core shipping activities or *incidental shipping activities.

51-110 Core shipping activities

(1) Core shipping activities are activities directly involved in operating a vessel to carry *shipping cargo or *shipping passengers for consideration.

(2) Without limiting subsection (1), core shipping activities include the following:

(a) carrying the *shipping cargo or *shipping passengers on the vessel;

(b) crewing the vessel;

(c) carrying goods on board for the operation of the vessel (including for the enjoyment of shipping passengers);

(d) providing the containers that carry shipping cargo on the vessel;

(e) loading shipping cargo onto, and unloading it from, the vessel;

(f) repacking shipping cargo to be carried on the vessel;

(g) providing temporary storage for shipping cargo just before or after its carriage on the vessel;

(h) providing space on board the vessel for carrying shipping cargo or shipping passengers;

(i) activities generating onboard income from shipping passengers of the vessel;

(j) providing shore excursions to shipping passengers of the vessel;

(k) transporting shipping cargo, or shipping passengers, between the vessel and the shore;

(l) providing administration and insurance services that are directly related to carrying shipping cargo or shipping passengers on the vessel;

(m) onboard selling of tickets on behalf of other entities to shipping passengers of the vessel;

(n) onboard advertising to shipping passengers of the vessel;

(o) providing quay-side services to shipping passengers that:

(i) are similar to those provided on the vessel; and

(ii) are provided from a floor area that does not exceed that from which similar services are provided on the vessel;

(p) providing car parking to individuals while they are shipping passengers on the vessel;

(q) making contracts solely to reduce the risk of financial loss from currency exchange rate fluctuations that directly relate to the operation of the vessel;

(r) an activity specified in regulations made for the purposes of this paragraph.

(3) Despite subsections (1) and (2), core shipping activities do not include an activity specified in regulations made for the purposes of this subsection.

51-115 Incidental shipping activities

Incidental shipping activities are activities incidental to *core shipping activities.