ATO Interpretative Decision
ATO ID 2006/114
Excise
Excise: ship's stores consumed during an aborted international voyage-
This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is excise duty payable on ship's stores that are consumed during an aborted international voyage?
Decision
No. Excise duty is not payable on ship's stores that are consumed during an aborted international voyage.
Facts
A ship leaves port with the genuine intention of undertaking an overseas voyage.
The vessel has ship's stores on board. Some or all of the ship's stores are consumed during the voyage.
The ship is forced to return to an Australian port without making landfall overseas.
Reasons for Decision:
Section 160A of the Excise Act 1901 (Excise Act) provides that ship's stores will not be subject to duty except as prescribed by the regulations.
Therefore, goods taken on board a vessel will be free from excise duty if:
- 1.
- The goods are properly regarded as ship's stores; and
- 2.
- None of the exceptions specified in the regulations are applicable.
The term 'ship's stores' is defined in subsection 160A(5) of the Excise Act as follows:
ship's stores
means stores for the use of the passengers or crew of an overseas ship, or for the service of an overseas ship.
The term 'overseas ship' is defined in section 4 of the Excise Act as follows:
Overseas ship
has the same meaning as ship has in Part VII of the Customs Act 1901.
The term 'ship' is defined in section 130C (of Part VII) of the Customs Act 1901 (Customs Act) as follows:
ship
does not include:
The expression 'international voyage' is also defined by section 130C of the Customs Act to mean, in relation to a ship:
...a voyage, whether direct or indirect, between a place in Australia and a place outside Australia.
It was stated in the High Court case of BP Australia Limited v. Bissaker (1987) 163 CLR 106; 71 ALR 449 that:
The words "whether direct or indirect" take account of the circumstance that a vessel may, for example, proceed to or from an Australian port to a foreign port via another Australian port. In this situation the fact that a foreign port is not the previous port of call or the immediate destination does not detract from the international character of the voyage.
It is reasonable to accept that where a vessel leaves port with the genuine intention of undertaking an overseas voyage, it is an overseas ship under the definition of 'ship' in the Customs Act, notwithstanding the fact that at some point, through misadventure or some other eventuality, it has to turn around. In such an instance, excisable goods provided to passengers and crew will be ship's stores and will be free from duty unless they are rendered excisable via the regulations to the Excise Act.
However, if the vessel never intended to make an international voyage it is never engaged in an international voyage and the goods were never classified as ship's stores. Excise duty would be payable in this circumstance.
As detailed below, section 55 of Excise Regulation 2015 sets out a number of circumstances where ship's stores are subject to duty.
55 Ship's stores liable to excise duty
Provided that the goods consumed on the vessel are dispensed to passengers or crew in acceptable quantities (for example, spirits by the nip and cigarettes by the individual packet) they will not be liable to excise duty even where the vessel is forced to return to an Australian port without making landfall overseas. The only exceptions are where there was never a genuine intention for the vessel to undertake an overseas journey (in which case the goods cannot be regarded as ship's stores) or where the stores are dispensed to people or in quantities that render them liable to excise duty under the Excise Regulation 2015.
Amendment History
| Date of amendment | Part | Comment |
|---|---|---|
| 14 August 2015 | Reasons for Decision & Legislative References | Updated reference to regulation 55 with new reference to section 55 |
| 3 July 2015 | Reasons for Decision | Changes to citations due to Excise Regulation 2015 replacing Excise Regulations 1925 |
| 21 March 2014 | Reasons For Decision | Minor spelling error, formatting and removal of duplication |
Legislative References:
Excise Act 1901
section 160A
section 130C Excise Regulation 2015
section 55
Case References:
BP Australia Limited v. Bissaker
(1987) 163 CLR 106
71 ALR 449
Keywords
Excise
Ship's stores
ISSN: 1445-2782
| Date: | Version: | |
| 10 May 2006 | Original statement | |
| 21 March 2014 | Updated statement | |
| 3 July 2015 | Updated statement | |
| You are here | 14 August 2015 | Updated statement |
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