SHIPPING REFORM (TAX INCENTIVES) BILL 2012

i Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

Contents

Part 1--Preliminary

1 Short

title

...........................................................................................

2 Commencement

.................................................................................

3 Object

.................................................................................................

4 Simplified

outline

..............................................................................

5 Definitions

.........................................................................................

6 Management

requirements

.................................................................

Application to external Territories and outside Australia .................. 6

Part 2--Certificates for vessels

8 Certificates

for

vessels

.......................................................................

Shipping exempt income certificates not to be issued in

certain circumstances ......................................................................... 8

10 Requirements

for

vessels

.................................................................

Applying for a certificate ................................................................. 11

Minister may request further information ........................................ 11

13 Non-compliance

relating

to certificates ........................................... 12

Part 3--Notices for vessels

Notices for vessels ........................................................................... 13

Applying for a notice ....................................................................... 13

Minister may request further information ........................................ 14

17 Non-compliance

relating to notices ................................................. 14

Part 4--Requesting information and documents

Persons to whom this Part applies ................................................... 16

19 Requesting

information or documents ............................................. 16

Failing to give the information or produce the documents .............. 17

21 Copying

documents--compensation ............................................... 17

22 Copies

documents ........................................................................ 17

Minister may retain documents ........................................................ 18

Part 5--Miscellaneous

Review by the Administrative Appeals Tribunal ............................. 19

25 Disclosing

information .................................................................... 19

26 Approved

forms

...............................................................................

27 Delegation

........................................................................................

28 Regulations

......................................................................................

Part 1 Preliminary

Section 3

2 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

3 Object

The object of this Act is to provide the framework for tax

incentives:

(a) to encourage investment in the Australian shipping industry;

and

(b) to encourage the development of sustainable employment and

skills opportunities for Australian seafarers.

4 Simplified outline

The following is a simplified outline of this Act:

�

A corporation that is issued a certificate under Part 2 for a

vessel for an income year can be eligible for tax incentives

under the Income Tax Assessment Act 1997 for the income

year.

�

The corporation can maximise the tax incentives for the first

income year for the vessel by applying during that year for a

notice under Part 3.

Note:

The tax incentives are set out in subsections 40-102(4) and 40-285(5),

sections 40-362 and 51-100 and Subdivision 61-N of the Income Tax

Assessment Act 1997.

5 Definitions

(1) In this Act:

activities in support of the fishing operations of a fishing vessel

include:

(a) the storage and transport of fish taken, caught or captured by

the fishing vessel; and

(b) the provision of food, fuel and other supplies to the fishing

vessel while it is engaged in fishing operations; and

while it is engaged in fishing operations.

approved form has the meaning given by section 26.

Preliminary Part 1

Section 5

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 3

Australia, when used in a geographical sense, includes the external

Territories.

business day means a day that is not:

(a) a Saturday; or

(b) a Sunday; or

(d) 27, 28, 29, 30 or 31 December.

constitutional corporation means a corporation to which

paragraph 51(xx) of the Constitution applies.

fish includes turtles, dugong, crustacea, molluscs and any other

living resources of the sea or of the seabed.

fishing fleet support vessel means a vessel used wholly or mainly

in activities in support of the fishing operations of a fishing vessel.

fishing operations means:

(a) the taking, catching or capturing of fish for trading or

manufacturing purposes; and

(b) the processing or carrying of the fish that are taken, caught or

captured.

fishing vessel means a vessel used wholly or mainly for fishing

operations.

government vessel means a vessel:

(a) that belongs to any of the following entities (a government

entity):

(i) the Commonwealth, a State or Territory;

(ii) a body corporate (other than a constitutional

corporation) established for a public purpose under a

law of the Commonwealth, a State or Territory; or

(b) the beneficial interest in which is vested in a government

entity; or

exclusive possession of, a government entity.

Part 1 Preliminary

Section 5

4 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

gross tonnage has the same meaning as in the Tonnage

Convention.

harbour means a natural or artificial harbour, and includes an

estuary, navigable river, creek, channel, dock, pier, jetty, offshore

terminal or other place in or at which vessels can load and unload

goods or embark and disembark passengers.

inland waterways vessel means a vessel (other than a government

vessel) that is used wholly in waters other than waters of the sea.

lawyer means a barrister, a solicitor, a barrister and solicitor, or a

legal practitioner, of a federal court or of a court of a State or

Territory.

management requirements has the meaning given by section 6.

offshore industry vessel means a vessel that is used wholly or

mainly in, or in any operations or activities associated with or

incidental to, exploring or exploiting the mineral and other

non-living resources of the seabed and its subsoil.

recreational vessel means a vessel used wholly for recreational or

sporting activities (whether or not let, or intended to be let, for

consideration).

salvage operation means any act or activity undertaken to assist a

vessel or any other property in danger in any waters.

salvage vessel means a vessel that is used wholly or mainly for

salvage operations.

Secretary means the Secretary of the Department.

shipping cargo means any personal property:

(a) that is carried on board a vessel under a contract; or

(b) that is carried on board a vessel, and for which a bill of

lading, or a receipt of a similar kind, is issued.

shipping exempt income certificate has the meaning given by

subsection 9(2).

Preliminary Part 1

Section 6

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 5

shipping passenger means a person carried on board a vessel with

the knowledge or consent of the owner, charterer or master of the

vessel, other than:

(a) a person employed or engaged in any capacity on board the

vessel by the business operating the vessel; or

(b) a person on board the vessel:

(i) under an obligation imposed on the owner, charterer or

master by any law (including a law of a country other

than Australia); or

(ii) because of circumstances that could not have been

prevented by the owner, charterer or master.

tonnage certificate means a certificate issued by the

Commonwealth Government in accordance with the Tonnage

Convention.

Tonnage Convention means the International Convention on

Tonnage Measurement of Ships, done at London on 23 June 1969,

as amended and in force for Australia from time to time.

Note:

The text of the Convention is set out in Australian Treaty Series 1982

No. 15 ([1982] ATS 15). In 2012, the text of a Convention in the

Australian Treaty Series was accessible through the Australian

Treaties Library on the AustLII website (www.austlii.edu.au).

training requirements means any requirements specified in

regulations made for the purposes of this definition.

vessel means any kind of vessel used in navigation by water,

however propelled or moved.

(2) Subject to subsection (1), an expression used in this Act that is also

used in the Income Tax Assessment Act 1997 has the same meaning

in this Act as it has in that Act.

6 Management requirements

(1)

Management requirements are any requirements specified in

regulations made for the purposes of this section.

Part 1 Preliminary

Section 7

6 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

(2) Without limiting subsection (1), the regulations may require certain

management activities to be conducted within Australia, including

specified activities relating to any or all of the following:

(a)

strategic

management;

(b)

technical

management;

(c)

commercial

management;

(d)

crew

management.

7 Application to external Territories and outside Australia

(1) This Act extends to every external Territory.

(2) Except so far as the contrary intention appears, this Act extends to

acts, omissions, matters and things outside Australia.

Certificates for vessels Part 2

Section 8

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 7

Part 2--Certificates for vessels

8 Certificates for vessels

(1) The Minister must, on application, issue a certificate to an entity

for a vessel for an income year (the certificate year) if:

(a) the entity is a constitutional corporation; and

(b) the requirements in section 10 are met for the vessel for one

or more days during the certificate year; and

for use, wholly or mainly for business or commercial

activities involving carrying shipping cargo, or shipping

passengers, on voyages.

Note 1:

A certificate is needed for an entity to be eligible for a shipping tax

incentive for the certificate year.

Note 2:

A decision under this subsection is reviewable (see section 24).

(2) The certificate may set out:

(a) that the entity's management arrangements meet the

management requirements; and

(b) that the entity has a training plan that meets the training

requirements; and

the requirements referred to in subsection (3) are likely to be

met.

The certificate may set out other matters.

Note 1:

The certificate will need to set out the matters in paragraphs (a) and

(b) for the entity to be eligible for the exempt income incentive (see

section 51-100 of the Income Tax Assessment Act 1997).

Note 2:

For paragraph (c), the applicant may have been required to give

information about the next income year (see paragraph 11(2)(b)).

Note 3:

A decision about the matters set out in the certificate is reviewable

(see section 24).

(3) The certificate must set out the days during the certificate year for

which all of the following requirements are met:

(a) the requirements in paragraphs (1)(a), (b) and (c);

Part 2 Certificates for vessels

Section 9

8 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

(b) the management requirements and training requirements, if

the certificate sets out the matters in paragraphs (2)(a) and

(b).

Note:

A decision about the matters set out in the certificate is reviewable

(see section 24).

(4) However, the days set out under subsection (3) must not include:

(a) a day during the first 9 months of the certificate year if:

(i) a certificate under this section has never been issued to

the entity for the vessel for an earlier income year; and

(ii) the entity does not have a notice under section 14 for the

vessel for the certificate year; or

(b) a day that is earlier than 1 July 2012.

(5) For the purposes of this Act and the Income Tax Assessment Act

1997, the days set out under subsection (3) are the days to which

the certificate applies.

Note:

These days may be varied (see section 13).

(6) Despite subsection (1), the Minister is not required to issue a

certificate under this section if a request under section 12 for

information about the application for the certificate has not been

complied with.

9 Shipping exempt income certificates not to be issued in certain

circumstances

10 year lockout period applies in certain circumstances

(1) Despite section 8, the Minister must not issue a shipping exempt

income certificate under that section to an entity for a vessel for the

certificate year if:

(a) the entity does not have a shipping exempt income certificate

for the vessel for the previous income year; and

(b) a shipping exempt income certificate has been issued to the

entity for the vessel for that previous income year or an

earlier income year; and

Certificates for vessels Part 2

Section 9

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 9

of income years determined under subsection (3) for the

entity, between:

(i) the last income year for which a shipping exempt

income certificate has been issued to the entity for the

vessel; and

(ii) the certificate year.

(2)

shipping exempt income certificate is a certificate issued under

section 8 that sets out the matters in paragraphs 8(2)(a) and (b).

Reducing the 10 year lockout period

(3) The Minister may, on application, determine a number less than 10

to be the number of income years that applies to the applicant

under paragraph (1)(c).

Note:

A decision under this subsection is reviewable (see section 24).

(4) An application for a determination under subsection (3) must be:

(a) in the approved form; and

(b) accompanied by the fee (if any) specified in regulations made

for the purposes of this paragraph.

(5) A determination under subsection (3) is not a legislative

instrument.

Extension to associates

(6) Paragraphs (1)(a), (b) and (c) apply in relation to an applicant for a

certificate as if each entity that is, or has at any time been, an

associate of the applicant were at all times a part of the applicant

rather than a separate entity.

Certificate can still be issued for other tax incentives

(7) This section does not prevent the Minister from issuing to the

entity a certificate under section 8 for the vessel for the certificate

year that is not a shipping exempt income certificate.

Part 2 Certificates for vessels

Section 10

10 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

10 Requirements for vessels

(1) The requirements for the vessel are as follows:

(a) the tonnage requirement (see subsection (2) or (3));

(b) that the vessel is registered (within the meaning of the

Shipping Registration Act 1981);

(2) The tonnage requirement is met for the vessel if a tonnage

certificate is in force for the vessel stating that the vessel has a

gross tonnage of at least 500.

(3) The tonnage requirement is also met for the vessel if:

(a) a tonnage certificate is in force for the vessel stating that the

vessel has a gross tonnage of at least 200 but less than 500;

and

(b) the Minister is satisfied that during the income year the

vessel has been, or will be, used wholly or mainly for

carrying shipping cargo to, from or within regional or remote

Australia.

Excluded vessels

(4) The excluded kinds of vessels are as follows:

(a)

recreational

vessels;

(b) fishing vessels and fishing fleet support vessels;

(d)

inland

waterways

vessels;

(e)

salvage

vessels;

(f)

tugboats;

(g) vessels operating wholly or mainly within a harbour;

(h) vessels operating wholly or mainly from a stationary

position;

(i)

government

vessels;

(j) vessels owned or operated by:

(i) the Australian Defence Force; or

(ii) the defence force of another country.

Certificates for vessels Part 2

Section 11

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 11

11 Applying for a certificate

(1) An application for a certificate under section 8 must be:

(a) in the approved form; and

(b) accompanied by the fee (if any) specified in regulations made

for the purposes of this paragraph; and

before the entity is required to lodge its income tax return for

the income year.

Note:

Section 26 deals with approved forms.

(2) As well as requiring information relevant to the income year, the

approved form may require:

(a) information about any tax incentives the entity utilised for the

previous income year in reliance on a certificate issued under

section 8 for the previous income year; and

(b) information about the following for the next income year:

(i) the vessel and its expected use;

(ii) the applicant's arrangements in relation to the vessel.

Note:

A certificate may give notice of the likelihood of a further certificate

being issued for the next income year (see paragraph 8(2)(c)).

12 Minister may request further information

(1) The Minister may request the applicant in writing to give specified

information, or specified kinds of information, to the Minister

about the application.

(2) The request may be for the information or kinds of information to

be given within 10 business days after the request was made.

Note:

Failing to comply with the request may result in the Minister refusing

to issue the certificate.

(3) The request may be for the information or kinds of information to

be given in the approved form.

Note:

Section 26 deals with approved forms.

(4) Subsections (2) and (3) do not limit subsection (1).

Part 2 Certificates for vessels

Section 13

12 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

13 Non-compliance relating to certificates

(1) This section applies in relation to a certificate issued under

section 8 to an entity for an income year if:

(a) based on information currently before the Minister, the

Minister is satisfied that the certificate should not have been

issued; or

(b) the entity fails to comply, to the extent that it is capable of

doing so, with a notice given to it under subsection 19(1)

(about providing information) in relation to the certificate.

(2) The Minister may:

(a) give the entity one or more written requests to take specified

remedial action within specified periods; and

(b) if satisfied that the entity has failed to comply with a request

given under paragraph (a), vary or revoke the certificate by

written notice given to the entity.

Note 1:

A decision under paragraph (b) is reviewable (see section 24).

Note 2:

An example of a variation is varying the days to which the certificate

applies. Another is varying the certificate so that it no longer sets out

the matters in paragraphs 8(2)(a) and (b), and so ceases to be a

shipping exempt income certificate.

Note 3:

Revoking the certificate means the entity ceases to have it. If a

certificate is revoked, or ceases to be a shipping exempt income

certificate, the entity will not be eligible for the exempt income

incentive for up to another 10 income years (see section 9).

Note 4:

Consequences of a revocation will cease to apply if the revocation is

set aside on review.

(3) If the Minister is satisfied that the circumstances require immediate

action, the Minister may, by written notice given to the entity, vary

or revoke the certificate without acting under subsection (2).

Note:

A decision under this subsection is reviewable (see section 24).

Notices for vessels Part 3

Section 14

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 13

Part 3--Notices for vessels

14 Notices for vessels

(1) The Minister must, on application, give a notice to an entity for a

vessel for an income year if:

(a) the entity is a constitutional corporation; and

(b) the requirements in section 10 are met for the vessel for one

or more days during the income year; and

available for use, wholly or mainly for business or

commercial activities involving carrying shipping cargo, or

shipping passengers, on voyages.

Note 1:

A notice is only relevant for the first income year that the entity seeks

shipping tax incentives for the vessel. Getting the notice maximises

the incentives for that year (see subsection 8(4)).

Note 2:

A decision under this subsection is reviewable (see section 24).

(2) The notice may set out:

(a) that the entity's management arrangements meet the

management requirements; and

(b) that the entity has a training plan that meets the training

requirements.

The notice may set out other matters.

(3) Despite subsection (1), the Minister is not required to give a notice

under this section if a request under section 16 for information

about the application for the notice has not been complied with.

15 Applying for a notice

An application for a notice under section 14 must be:

(a) in the approved form; and

(b) accompanied by the fee (if any) specified in regulations made

for the purposes of this paragraph; and

Note:

Section 26 deals with approved forms.

Part 3 Notices for vessels

Section 16

14 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

16 Minister may request further information

(1) The Minister may request the applicant in writing to give specified

information, or specified kinds of information, to the Minister

about the application.

(2) The request may be for the information or kinds of information to

be given within 30 days after the request was made.

Note:

Failing to comply with the request may result in the Minister refusing

to give the notice.

(3) The request may be for the information or kinds of information to

be given in the approved form.

Note:

Section 26 deals with approved forms.

(4) Subsections (2) and (3) do not limit subsection (1).

17 Non-compliance relating to notices

(1) This section applies in relation to a notice (an eligibility notice)

given under section 14 to an entity for an income year if:

(a) based on information currently before the Minister, the

Minister is satisfied that the eligibility notice should not have

been given; or

(b) the entity fails to comply, to the extent that it is capable of

doing so, with a notice given to it under subsection 19(1)

(about providing information) in relation to the eligibility

notice.

(2) The Minister may:

(a) give the entity one or more written requests to take specified

remedial action within specified periods; and

(b) by written notice given to the entity, vary or revoke the

eligibility notice if the Minister is satisfied that the entity has

failed to comply with a request given under paragraph (a).

Note:

A decision under paragraph (b) is reviewable (see section 24).

(3) If the Minister is satisfied that the circumstances require immediate

action, the Minister may, by written notice given to the entity, vary

or revoke the eligibility notice without acting under subsection (2).

Part 4 Requesting information and documents

Section 18

16 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

Part 4--Requesting information and documents

18 Persons to whom this Part applies

(1) This Part applies to a person if the Minister believes on reasonable

grounds that the person is capable of giving information, or

producing a document, relevant to whether any of the following

requirements is being met for a certificate issued under section 8:

(a) the requirements in subsection 8(1);

(b) the management requirements and training requirements, if

the certificate sets out the matters in paragraphs 8(2)(a) and

(b).

(2) This Part applies to a person if the Minister believes on reasonable

grounds that the person is capable of giving information, or

producing a document, relevant to whether any of the following

requirements is being met for a notice (the eligibility notice) given

under section 14:

(a) the requirements in subsection 14(1);

(b) the management requirements and training requirements, if

the notice sets out the matters in paragraphs 14(2)(a) and (b).

(3) This Part does not apply to a lawyer who is acting, or has acted, for

the entity that was issued the certificate or given the eligibility

notice (as appropriate).

19 Requesting information or documents

(1) The Minister may, by written notice given to the person, request

the person:

(a) to give the Minister the information; or

(b) to produce to the Minister the document; or

Minister those copies;

within the period and in the manner specified in the notice.

(2) The notice must:

Requesting information and documents Part 4

Section 20

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 17

(a) not specify a period shorter than 14 days after the notice is

given; and

(b) set out the effect of section 20; and

given the eligibility notice, referred to in section 18--set out

the effect of section 13 or 17 (as appropriate).

Note:

Section 13 allows the Minister to vary or revoke the certificate if the

person fails to comply with the notice given to it under subsection (1).

Section 17 applies in a corresponding way to eligibility notices.

20 Failing to give the information or produce the documents

A person commits an offence if:

(a) the person has been given a notice under subsection 19(1);

and

(b) the person fails to comply with the notice to the extent that

the person is capable of doing so.

Penalty: 30 penalty units.

21 Copying documents--compensation

A person is entitled to be paid by the Minister, on behalf of the

Commonwealth, reasonable compensation for complying with a

request covered by paragraph 19(1)(c).

22 Copies of documents

(1) The Minister may:

(a) inspect a document or copy produced under subsection 19(1);

and

(b) make and retain copies of, or take and retain extracts from,

such a document.

(2) The Minister may retain possession of a copy of a document

produced in accordance with a request covered by paragraph

19(1)(c).

Part 4 Requesting information and documents

Section 23

18 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

23 Minister may retain documents

(1) The Minister may take, and retain for as long as is necessary,

possession of a document produced under subsection 19(1).

(2) The person otherwise entitled to possession of the document is

entitled to be supplied, as soon as practicable, with a copy certified

by the Minister to be a true copy.

(3) The certified copy must be received in all courts and tribunals as

evidence as if it were the original.

(4) Until a certified copy is supplied, the Minister must, at such times

and places as the Minister thinks appropriate, permit the person

otherwise entitled to possession of the document, or a person

authorised by that person, to inspect and make copies of, or take

extracts from, the document.

Miscellaneous Part 5

Section 24

Shipping Reform (Tax Incentives) Bill 2012 No. , 2012 19

Part 5--Miscellaneous

24 Review by the Administrative Appeals Tribunal

An application may be made to the Administrative Appeals

Tribunal for review of any of the following decisions of the

Minister:

(a) a decision under subsection 8(1) to refuse to issue a

certificate;

(b) a decision under section 8 about the matters set out in a

certificate issued under subsection 8(1);

determination;

(d) a decision under section 13 to vary or revoke a certificate;

(e) a decision under subsection 14(1) to refuse to give a notice;

(f) a decision under section 17 to vary or revoke a notice.

Note:

Paragraph (b) enables, for example, review of the number of days to

which the certificate applies (see subsections 8(3), (4) and (5)).

25 Disclosing information

(1) The Secretary may publish on the Department's website

information described in subsection (3) if the information is in an

aggregated form that does not disclose, either directly or indirectly,

information about a particular:

(a)

entity;

(b) consolidated group or MEC group; or

(c)

vessel.

(2) The Secretary or an APS employee in the Department may disclose

information described in subsection (3) to:

(a) the Commissioner; or

(b) a person specified in regulations made for the purposes of

this paragraph.

Note 1:

Persons may be specified by class, see subsection 13(3) of the

Legislative Instruments Act 2003.

Part 5 Miscellaneous

Section 26

20 Shipping Reform (Tax Incentives) Bill 2012 No. , 2012

Note 2:

The expression APS employee is defined in the Acts Interpretation Act

1901.

(3) The information is information (other than personal information

(within the meaning of the Privacy Act 1988)) obtained under this

Act, including information relating to:

(a) an applicant for a certificate under section 8; or

(b) an applicant for a notice under section 14.

26 Approved forms

(1) This section applies if a provision of this Act requires a thing to be

in the approved form.

(2) To be in the approved form for the provision, the thing must:

(a) be in writing in a form approved by the Minister; and

(b) include the information required by the form; and

the form.

27 Delegation

(1) The Minister may, by writing, delegate any or all of his or her

functions or powers under this Act to:

(a) the Secretary; or

(b) an SES employee, or acting SES employee, in the

Department; or

(d) a Second Commissioner of Taxation; or

(e) an SES employee, or acting SES employee, in the Australian

Taxation Office.

Note: The

expressions

SES employee and acting SES employee are defined

in the Acts Interpretation Act 1901.

(2) In exercising powers under a delegation, the delegate must comply

with any directions of the Minister.

28 Regulations

(1) The Governor-General may make regulations prescribing matters:

Commonwealth of Australia Bills

SHIPPING REFORM (TAX INCENTIVES) BILL 2012