Australia's shipping industry received a much needed
life-line when the report 'Rebuilding Australia's Coastal
Shipping Industry' was tabled into Federal Parliament on 20
The report tabled by the Committee on Infrastructure, Transport,
Regional Development and Local Government makes 14 key
recommendations for legislative and industry reform. This included
the following three recommendations within Australia's tax
the introduction of an optional tonnage tax regime in Australia
that is linked to mandatory training requirements;
the re-introduction of accelerated depreciation arrangements;
a review of Section 23 AG of the Income Tax Assessment Act
The aim of the recommendations is to revitalise the diminishing
Australian shipping industry. The Committee chair, Labour MP
Catherine King said the Australian shipping industry has been
shrinking particularly over the past decade, with increased
reliance on foreign vessels.
"The Australian coastal shipping industry has been in
decline for some time. Increasingly, foreign vessels have been
employed to carry goods around the Australian coast to the
detriment of the Australian coastal shipping fleet," Ms King
The report recommends the introduction of a tonnage tax for
Australian registered ships that would give companies the option of
paying tax based on the tonnage of their ships rather than on the
profits of their trade. The report explains that "this can be
beneficial in years where ships have made a lot of money but may
have a negative impact in years where ships do not".
"Tonnage taxes have already been introduced in several
countries including the UK, Belgium, Germany, Greece, Norway,
Denmark and the USA. In the UK, it was found the tonnage tax has
been linked in increasing the tonnage on the UK register but to a
less extent the number of ships", the report says.
"There is a general consensus across various maritime
industry stakeholders that the introduction of a tonnage tax in
Australia would have a positive effect on the industry." An
optional tonnage tax regime has been suggested to linked mandatory
training requirement. This would encourage ship owners to register
and remain registered in Australia and by linking the tax to
training requirements the cost of training seafarers may be
An accelerated depreciation regime was in place in the early
1990s but was subsequently scrapped in 1996 when Australia had one
of the youngest fleets in the world. The Committee believes a
re-introduction would stimulate growth in the fleet and encourage
investment in new ships. The committee referred to write off
periods of 5 and 7.5 years in their discussion.
The Committee suggests that an accelerated regime would have a
positive impact on the size of the Australian fleet; with flow-on
effects such as greater training opportunities and modern design
which can improve on operating efficiencies and could be more
Retention of qualified seafarers
Under section 23AG of the Income Tax Assessment Act 1936, an
Australian resident engaged in work in a foreign country is exempt
from tax if they have engaged in that work for more than 90 days.
For seafarers this test can be difficult to pass since the high
seas are not considered a foreign country. As a result, Australian
seafarers tend to receive lower after tax salaries (relative to
seafarers of other nations) because of their Australian tax
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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