Taxation Determination

TD 93/89

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 ruling.

FOI status:

may be releasedFOI number: I 1214934

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

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

Previously issued as Draft TD93/D84


ATO references:
NO CANN J5/185/2

ISSN 1038 - 8982

Related Rulings/Determinations:

IT 2270,

Subject References:
double taxation

Legislative References:
ITAA 129;