Shipping Reform (Tax Incentives) Regulation 2012

Administered by Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts

Legislation au F2012L01442 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

Select Legislative Instrument 2012 No. 137

Issued under the authority of the Minister for Infrastructure and Transport

Subject- Shipping Reform (Tax Incentives) Act 2012

 

  Shipping Reform (Tax Incentives) Regulation 2012

 

 

Subsection 28(1) of the Shipping Reform (Tax Incentives) Act 2012 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted to be prescribed; or necessary or convenient to be prescribed for carrying out or giving effect to this Act. 

Part 1 of the Regulation provides the definitions of each category of seafarer training by reference to the duties performed by three categories of crew under the command of the master of the vessel.  These definitions describe the nature of each occupation and are designed to enable a shipping company to understand the seafarer training requirement that it must satisfy in order to comply with the Regulation. 

 

Part 2 prescribes the management and training requirements with which applicants for an income tax exemption must comply under sub section 5(1) and section 6 of the Act. The regulation provides that a shipping company must ensure that for each vessel it operates, there is at least one person undertaking training for each of the following categories of crew: engineer officer; deck officer; and integrated rating and steward.  The Regulation explains the functions that comprise each of the management requirements and which need to be undertaken in Australia. 

 

In accordance with section 17 of the Legislative Instruments Act 2003, industry stakeholders including shipowners and operators and industry representative organisations like the Australian Shipowners Association, Shipping Australia Limited, Maritime Union of Australia etcetera were consulted in the making of the Regulation.

 

Details of the Regulation are set out at the Attachment.

 

The Act specifies no conditions that need to be satisfied before the power to make the Regulation may be exercised.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The  Regulation commences on 1 July 2012.

 

      Authority: Subsection 28(1) of the Shipping                                                                                      Reform (Tax Incentives) Act 2012

 

 

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Shipping Reform (Tax Incentives) Regulation 2012

A company wishing to access the Income tax Exemption (ITE) must meet the management requirements set out in this Regulation and have a training plan directed at increasing the employment and training of Australian seafarers.  Details of the training plan are set out in the Regulation. 

 

Human rights implications

The Regulation engages the following human rights:

 

Right to Privacy

 

Article 17 of the International Convention on Civil and Political Rights (ICCPR) specifies that no one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation, and that everyone has the right to the protection of the law against such interference or attacks.  

 

In relation to a company’s training plan the details include names, age and sex as well as the qualifications already held and those being sought.  These details are set out in Part 2 of the Regulation. 

 

Section 25 of the Act allows the Secretary of the Department to publish certain aggregate information about an entity, a consolidated group or a vessel and to disclose information to the Commissioner (of Taxation).  However, the information that may be published or disclosed relates to the grant of a Certificate, or a Notice, but excludes personal information (within the meaning of the Privacy Act 1988).  The information is therefore confined to company level information that relates to the concessions (generally at an aggregate level as a means of reporting on the benefits derived from these concessions).  It will also allow the publication of aggregate information that will allow assessment of the effectiveness of the concessions and the training of seafarers, and where appropriate the disclosure of relevant information to the Australian Taxation Office.

 

Conclusion

This Regulation is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 because the extent of any limitation of human rights is reasonable and proportionate to the information sought and benefits conveyed to applicants. 

ATTACHMENT

 

 

Details of the  Shipping Reform (Tax Incentives) Regulation 2012

 

Part 1 – Preliminary

 

Section 1 - Name of Regulation

 

This title of the Regulation is the Shipping Reform (Tax Incentives) Regulation 2012.

 

Section 2 - Commencement

 

The Regulation commences on 1 July 2012.

 

Section 3 - Definitions

 

Clause 3 provides the definitions in this Regulation.  These define what is meant by the various categories of seafarer training necessary for an entity to satisfy the training requirement in clause 4 of this regulation.  

 

Part 2 – Training and Management requirements

 

Section 4 -Training requirements

 

This clause provides the definition of the training requirements established by subsection 5(1) of the Shipping Reform (Tax Incentives) Act 2012.  A shipping company must ensure that for each vessel it operates, there is at least one person undertaking training for each of the following categories:

 

(a)   engineer officer training;

(b)   deck officer training; and

(c)   integrated rating and steward training.

 

Some flexibility is provided to operators of multiple vessels in that the trainees can be spread across a number of vessels. The draft regulation provides an example to illustrate this.  Subclause 4(4) sets out the details the shipping company needs to provide for each trainee in order to satisfy the training requirement.

 

The training that needs to be provided relates to qualifications that have been approved under the Navigation Act 1912.  This Act confers power on the Australian Maritime Safety Authority (AMSA), as the authority responsible for Australia’s implementation of the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978, to approve seafarer qualifications and the method of their attainment.

 

Section 5 - Management requirements

 

This clause provides details of the management requirements established by section 6 of the Shipping Reform (Tax Incentives) Act 2012.  For a shipping company to gain access to the Income Tax Exemption provided for under the Tax Laws Amendment (Shipping Reform) Act 2012 it must satisfy these management requirements. These requirements involve having crew management and either commercial, technical or strategic operations undertaken in Australia.

 

Descriptions of the functions that comprise each of the management requirements and which need to be undertaken in Australia, as a means of growing the cluster of maritime activities performed in this country, are provided by this Regulation.

 

 

Overview

The Shipping Reform (Tax Incentives) Act 2012 was enacted to encourage the training and employment of Australian seafarers by providing income tax incentives to shipping companies that meet specific training and management requirements. The Act aims to address the gap in the maritime industry by promoting the development of a skilled Australian seafarer workforce and enhancing the maritime capabilities within Australia. The enacting body was the Parliament of Australia, with the objective of fostering a more robust and sustainable maritime sector that benefits the national economy and ensures the safety and efficiency of shipping operations. The accompanying Shipping Reform (Tax Incentives) Regulation 2012, issued under the authority of the Minister for Infrastructure and Transport, outlines the detailed requirements that shipping companies must meet to access the tax incentives, including specific training plans and management practices that must be implemented in Australia. The Regulation details the categories of seafarer training necessary for compliance and the management functions that must be performed within Australia to qualify for the income tax exemption. It also considers human rights implications, particularly the right to privacy, ensuring that personal information is handled appropriately and that any disclosure of information is limited to aggregate data for the purpose of assessing the effectiveness of the tax incentives. The Regulation was developed following consultations with industry stakeholders and is designed to be compatible with human rights, ensuring that any limitations on these rights are reasonable and proportionate to the benefits provided by the tax incentives.

Scope and Application

The Shipping Reform (Tax Incentives) Act 2012, along with its subsidiary legislation, the Shipping Reform (Tax Incentives) Regulation 2012, applies to shipping companies that seek to avail themselves of the income tax exemptions provided under the Act. These entities must ensure compliance with both the training and management requirements outlined in the Regulation to access the tax incentives. The geographic reach of this legislation is national, as it pertains to the operations of shipping companies within Australia and the training of Australian seafarers. The Act does not explicitly mention exclusions, exemptions, or thresholds, but it mandates that training plans and management functions be conducted within Australia. The Regulation further extends the application of the Act by detailing the specific training and management requirements necessary for compliance, thereby ensuring that the incentives are used to promote the growth of maritime activities and the training of Australian seafarers.

Key Provisions

The Shipping Reform (Tax Incentives) Regulation 2012 (the Regulation) provides the definitions and requirements necessary to implement the Shipping Reform (Tax Incentives) Act 2012 (the Act). It commences on 1 July 2012 and is made under the authority of subsection 28(1) of the Act. Part 1 of the Regulation defines the categories of seafarer training, which are engineer officer training, deck officer training, and integrated rating and steward training, by outlining the duties performed by the crew under the command of the master of the vessel. These definitions help shipping companies understand the specific training requirements they need to satisfy. Shipping companies that seek to access the income tax exemption (ITE) under the Act must meet the management and training requirements outlined in the Regulation. Specifically, they must ensure that for each vessel they operate, there is at least one person undertaking training in each of the three categories of crew: engineer officer, deck officer, and integrated rating and steward. The Regulation also details the management requirements, which involve having crew management and either commercial, technical, or strategic operations undertaken in Australia. This is intended to promote the growth of maritime activities within the country. The Regulation imposes several obligations on shipping companies. Firstly, they must develop and implement a training plan aimed at increasing the employment and training of Australian seafarers. This plan must include specific details about the trainees, such as their names, ages, sex, qualifications held, and those being sought. Secondly, shipping companies must ensure that they meet the management requirements by having the specified operations undertaken in Australia. These obligations are designed to promote the development of a skilled Australian maritime workforce and to ensure that the benefits of the tax exemption are directed towards enhancing maritime activities within Australia. There are potential consequences for shipping companies that fail to comply with the Regulation. Although the Act does not explicitly outline offences or penalties for breaches, non-compliance could result in the denial of the income tax exemption. Additionally, the Regulation allows for the publication of certain aggregate information about an entity, a consolidated group, or a vessel, but excludes personal information as defined by the Privacy Act 1988. Therefore, while specific penalties are not stated, failure to adhere to the requirements could have significant financial implications for companies seeking the tax exemption.

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