Commonwealth Numbered Acts

BOUNTY (SHIPS) AMENDMENT ACT 1985 No. 76 of 1985 - SECT 5

5. Section 4 of the Principal Act is repealed and the following sections are
substituted: Costs of construction or modification

"4. (1) For the purposes of this Act, the cost of the construction or
modification of a bountiable vessel includes-

   (a)  factory overhead charges (including rent, hire or leasing costs in
        relation to buildings, plant or equipment) apportioned on the basis of
        a full accounting period of the shipbuilder; and

   (b)  expenditure on research and development.



"(2) For the purposes of this Act, where, in an accounting period of a
shipbuilder, the shipbuilder receives from the Commonwealth, a State or
Territory or an authority of the Commonwealth or of a State or Territory a
grant in respect of the construction or modification of, research relating to,
or the development of, bountiable vessels of a particular kind, then-

   (a)  in a case where the shipbuilder is a non-prescribed shipbuilder-the
        cost of the construction or modification of bountiable vessels of that
        kind constructed or modified, in whole or in part, during the
        accounting period by the shipbuilder, being vessels in respect of the
        construction or modification of which bounty is payable, shall be
        reduced by the amount of the grant; or

   (b)  in a case where the shipbuilder is a prescribed shipbuilder-the cost
        of the construction or modification of bountiable vessels of that kind
        constructed or modified, in whole or in part, during the accounting
        period on behalf of the prescribed shipbuilder, being vessels in
        respect of the construction or modification of which bounty is
        payable, shall be reduced by the amount of the grant.



"(3) For the purposes of this Act, the cost of the construction or
modification of a bountiable vessel does not include-

   (a)  costs of general administration (other than factory and works
        administration), including, where the shipbuilder is a body corporate,
        corporate expenses;

   (b)  selling or service charges;

   (c)  sales tax in respect of the completed vessel;

   (d)  tax on income, other than tax on income deducted in respect of the
        wages, salaries or other remuneration of employees;

   (e)  costs incurred after the completion of the construction or
        modification of the vessel, other than costs incurred-

        (i)    in undertaking sea trials required-

                (A)  to determine the sea-worthiness of the vessel;

                (B)  under a law of the Commonwealth, of a State or Territory
                     or of a foreign country; or

                (C)  by a written contract with the owner of the vessel;

        (ii)   in rectifying defects notified to the shipbuilder before
               delivery of the vessel to the owner; and

        (iii)  in meeting insurance premiums to cover warranty claims made,
               within 12 months after the completion of the construction or
               modification of the vessel, in relation to work carried out by
               the shipbuilder on the vessel before the completion of the
               construction or modification of the vessel;

   (f)  without limiting the generality of paragraph (e), costs incurred in
        commissioning the completed vessel for the intended user of the
        vessel, whether or not the intended user is the shipbuilder;

   (g)  the value of perquisites provided to employees of the shipbuilder
        (including, where the shipbuilder is a body corporate, staff of the
        body corporate) that does not form part of their taxable income;

   (h)  profits;

   (j)  bonuses paid out of profits;

   (k)  costs charged to, or imposed on, the shipbuilder by an associate of
        the shipbuilder, other than costs actually incurred by the associate;

   (m)  interest, other than interest on money that has been borrowed from
        another person for the purpose of financing-

        (i)    bought-in material and stock;

        (ii)   work in progress;

        (iii)  research and development; or

        (iv)   the purchase of machinery, plant, equipment or buildings, being
               machinery, plant, equipment or buildings owned by the
               shipbuilder;

   (n)  depreciation of buildings, other than depreciation at a rate of 4% per
        annum, or, if another rate is prescribed for the purposes of this
        paragraph, the other rate, on the historic cost of buildings owned by
        the shipbuilder;

   (p)  depreciation of machinery, plant or equipment, other than depreciation
        of machinery, plant or equipment owned by the shipbuilder that is
        depreciation allowed by the Commissioner of Taxation for the purposes
        of a law of the Commonwealth relating to taxation;

   (q)  losses incurred on the sale or other disposal of machinery, plant,
        equipment or buildings;

   (r)  long service leave, other than provision for such leave;

   (s)  severance pay, other than severance pay in relation to service during
        a period that is within the period to which this Act applies and
        during which the shipbuilder was a shipbuilder;

   (t)  costs incurred in the delivery of the completed vessel;

   (u)  costs incurred in the supervision of the construction or modification
        of the vessel by persons other than the shipbuilder or designer, other
        than where the supervision is required under a law of the
        Commonwealth, of a State or Territory or of a foreign country;

   (v)  costs incurred in relation to fuel or lubricating oil, other than in
        relation to fuel or lubricating oil required for sea trials of a kind
        referred to in paragraph (e) (i);

   (w)  costs charged to, or imposed on, the shipbuilder by the owner of the
        vessel in relation to the ordering by the owner of machinery, plant or
        equipment for the vessel;

   (x)  costs incurred in the provision of machinery, plant or equipment
        (including fishing equipment) for the vessel, other than machinery,
        plant or equipment (not being reconditioned or used machinery, plant
        or equipment)-

        (i)    required for the navigation of the vessel;

        (ii)   with which the vessel is required to be fitted under a law of
               the Commonwealth, of a State or Territory or of a foreign
               country; or

        (iii)  included in a class of machinery, plant or equipment prescribed
               for the purposes of this paragraph;

   (y)  costs incurred in the provision of stores or other goods for the
        vessel, other than stores or other goods-

        (i)    required under a law of the Commonwealth, of a State or
               Territory or of a foreign country to be carried on the vessel;
               or

        (ii)   included in a class of stores or other goods prescribed for the
               purposes of this paragraph;

   (z)  performance bonds;

   (za) liquidated damages; and

   (zb) such other costs as are prescribed.

Determination of costs of construction or modification

"4A. (1) Where the Comptroller-General-

   (a)  is unable to verify the cost of the construction or modification of a
        bountiable vessel; or

   (b)  having regard to sound accounting principles, forms the opinion that
        costs included in the cost of the construction or modification of a
        bountiable vessel-

        (i)    are incorrect or overestimated;

        (ii)   are higher than would have been the case if the shipbuilder had
               not marginally costed or similarly disproportionately costed
               the construction of a vessel in respect of which bounty is not
               payable;

        (iii)  have been fixed in order to obtain an increase in bounty;

        (iv)   are unduly higher than costs incurred by other shipbuilders in
               respect of similar vessels;

        (v)    have been increased as the result of the influence of a
               relationship between the shipbuilder and an associate of the
               shipbuilder; or

        (vi)   are higher than would have been the case if the shipbuilder had
               provided services that were provided, and charged for, by an
               associate of the shipbuilder, the Comptroller-General may, in
               writing, determine the cost that is, for the purposes of this
               Act, to be taken to be the cost of the construction or
               modification of the vessel.

"(2) In making a determination under sub-section (1) in relation to a
bountiable vessel, the Comptroller-General may disregard any costs charged to,
or imposed on, the shipbuilder by an associate of the shipbuilder unless the
costs were actually incurred by the associate. Accounting periods

"4B. (1) Subject to sub-sections (2) and (3), each financial year is an
accounting period of a shipbuilder.

"(2) A shipbuilder may, within 3 months after the Bounty (Ships) Amendment 
Act 1985 receives the Royal Assent or becoming or again becoming a
shipbuilder, whichever last occurs, notify the Comptroller-General, in
writing, that the shipbuilder wishes each period of 12 months commencing on a
specified day in a specified month to be an accounting period of the
shipbuilder and, subject to sub-section (3), where the shipbuilder does so,
each such period is an accounting period of the shipbuilder.

"(3) Where-

   (a)  a shipbuilder has accounting periods of 12 months by virtue of
        sub-section (1) or (2) or a previous application of this sub-section;
        and

   (b)  it becomes necessary or convenient that other periods (in this
        sub-section referred to as the 'new periods'), being periods of 12
        months in respect of which annual accounting reports of the
        shipbuilder are required to be prepared for the purposes of another
        law of the Commonwealth or of a law of a State or Territory, should,
        in future, be the accounting periods of the shipbuilder, the
        shipbuilder may notify the Comptroller-General, in writing, that the
        shipbuilder wishes the new periods to be the accounting periods of the
        shipbuilder (being a notification describing the new periods by
        specifying the day and month of their commencement and setting out the
        reasons for the change of accounting periods) and, where the
        shipbuilder does so-

   (c)  the accounting period of the shipbuilder in which commences the
        earliest of the new periods that commences after the notification
        shall cease to be an accounting period of the shipbuilder and the
        period commencing on the first day of that former accounting period
        and ending on the day immediately preceding that earliest of the new
        periods shall be an accounting period of the shipbuilder; and

   (d)  after the end of the accounting period prescribed by paragraph (c),
        the new periods shall be the accounting periods of the shipbuilder.".