Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023

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

Legislation au F2023L01209 In force Legislative Instrument

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EXPLANATORY STATEMENT

Issued by authority of the Minister for Infrastructure, Transport, Regional Development and Local Government

 

Shipping Reform (Tax incentives) Act 2012

 

Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023

 

 

Legislative Authority

Subsection 10(5) of the Shipping Reform (Tax Incentives) Act 2012 (the Act) provides that the Minister may, by legislative instrument, specify:

a)      kinds of vessels that are to be excluded vessels; and

b)     kinds of vessels that are not to be excluded vessels.

 

The Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023 (the instrument) is made under section 10(5)(b) of the Act and is a disallowable legislative instrument for the purposes of the Legislation Act 2003.

 

Purpose

The instrument specifies LNG tankers and gas carriers operating on international routes and ro ro ferries operating on interstate routes as kinds of vessels that are not to be excluded vessels under subsection 10(4) of the Act.

 

Background

The Act provides a first step for the Australian shipping industry to access tax incentives in the Income Tax Assessment Act 1997. The aim of the Act is to encourage:

  • investment in the Australian shipping industry; and
  • the development of sustainable employment and skills opportunities for Australian seafarers.

The Act commenced operation on 1 July 2012.

 

Under Parts 2 and 3 of the Act, Australian operators of Australian registered vessels can apply for a notice or certificate. Access to a notice or certificate requires applicant entities to meet the requirements for vessels under section 10 of the Act. Vessels must meet the tonnage requirements and be a registered vessel within the meaning of the Shipping Registration Act 1981.

 

Additionally, vessels will not be eligible if they fall within the list of excluded vessels in subsection 10(4) of the Act.

 

Impact and effect

The instrument commences on 1 October 2023 to allow entities to benefit from the tax incentives for the relevant financial year in relation to an Australian registered vessel.

 

The instrument repeals and replaces the previous instrument, the Shipping Reform (Tax Incentives) Act 2012 Subsection 10 (5) specification of kinds of vessels which sunset on 1 October 2023. The instrument was made with minor amendments to continue the specification of LNG tankers and gas carriers operating solely on international routes and

ro ro ferries operating solely on interstate routes as kinds of vessels not to be excluded for the purposes of the Act.

 

The Act does not specify conditions that need to be satisfied before the power to make the instrument may be exercised.

 

Notes on sections

Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023

 

Section 1 – Name

This section provides that the name of the instrument is the Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023.

 

Section 2 – Commencement

This section provides for the Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023 to commence on 1 October 2023.

 

Section 3 – Authority

This section provides that the Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023 is made under section 10(5)(b) of the Shipping Reform (Tax Incentives) Act 2012.

 

Section 4 – Definitions

This section provides the definitions of terms used in the Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023.

 

Section 5 – Schedules

This section provides that each instrument that is specified in a Schedule to the instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to the instrument has effect according to its terms.

 

Section 6 – Kinds of Vessels that are not to be excluded vessels

This section specifies LNG tankers and gas carriers operating solely on international routes and ro ro ferries operating solely on interstate routes as kinds of vessels which are not to be excluded vessels for the purposes of the Shipping Reform (Tax Incentives) Act 2012.

 

Schedule 1 – Repeals

Schedule 1 specifies that the Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023 repeals the Shipping Reform (Tax Incentives) Act 2012 Subsection 10 (5) specification of kinds of vessels.

 

Consultation

Appropriate consultation has been undertaken in accordance with section 17 of the Legislation Act 2003.

 

From September 2021 to July 2023, the Department engaged in four rounds of consultation with various industry stakeholders including entities which normally apply for tax incentives notices or certificate under the Act, the Maritime Union of Australia and Maritime Industry Australia Ltd. Stakeholders were generally supportive of the remaking of the instrument with minor amendments before the 1 October 2023 deadline so its legal affect may continue.

 

The Australian Maritime Safety Authority, Treasury, the Australian Taxation Office and the Office of Impact Analysis were consulted on the development of the instrument.

 

Regulation Impact Statement

The Office of Impact Analysis (OIA) advised that in lieu of an Impact Analysis the Department may self-assess and certify the performance of the instrument. The performance of this instrument has been self-assessed, informed by consultation with stakeholders, and the instrument is determined to be operating effectively and efficiently. A certification letter for self-assessment was provided to the OIA in July 2023. The OIA reference is OBPR21-01064.


Statement of Compatibility with Human Rights

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

 

Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023

 

This Disallowable Legislative Instrument 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.

 

Overview of the Disallowable Legislative Instrument

The Shipping Reform (Tax Incentives) Act 2012 (the Act) effects elements of the Government’s Stronger Shipping for a Stronger Economy reform by establishing eligibility criteria for access to taxation incentives designed to revitalise Australia’s shipping industry. The Disallowable Legislative Instrument refines the list of excluded vessels under subsection 10(4) of the Act by specifying kinds of vessels that are not to be excluded vessels under the Act.

 

Human rights implications

This Disallowable Legislative Instrument does not engage any of the applicable rights or freedoms as the Instrument is of a minor or machinery nature.

 

Conclusion

This Disallowable Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

Overview

The Shipping Reform (Tax Incentives) Act 2012 was enacted to provide a first step for the Australian shipping industry to access tax incentives in the Income Tax Assessment Act 1997. This legislation aims to encourage investment in the Australian shipping industry and to develop sustainable employment and skills opportunities for Australian seafarers. The Act allows Australian operators of Australian registered vessels to apply for tax incentives, provided their vessels meet specific criteria, such as tonnage requirements and registration under the Shipping Registration Act 1981. Furthermore, vessels must not fall within the list of excluded vessels specified under the Act. The Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023 was made under the authority of the Minister for Infrastructure, Transport, Regional Development and Local Government, and specifies LNG tankers and gas carriers operating on international routes and ro ro ferries operating on interstate routes as kinds of vessels that are not to be excluded vessels under the Act. This instrument commenced on 1 October 2023 to allow entities to benefit from the tax incentives for the relevant financial year. The enactment of this Act by the Parliament of Australia addresses a gap in the provision of tax incentives for the Australian shipping industry, facilitating investment and the development of sustainable employment and skills opportunities.

Scope and Application

The Shipping Reform (Tax Incentives) Act 2012 and the Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023 apply to Australian operators of Australian registered vessels that meet the eligibility criteria for accessing tax incentives in the Income Tax Assessment Act 1997. The Act aims to encourage investment in the Australian shipping industry and the development of sustainable employment and skills opportunities for Australian seafarers. The Act applies to vessels that satisfy the tonnage requirements and are registered under the Shipping Registration Act 1981, excluding those listed as excluded vessels in subsection 10(4) of the Act. The instrument specifies LNG tankers and gas carriers operating on international routes and ro ro ferries operating on interstate routes as kinds of vessels that are not to be excluded, thus making them eligible for the tax incentives. The instrument came into effect on 1 October 2023, replacing the previous instrument that was set to sunset on that date. The application of the Act and the instrument is limited to Australian vessels operating within the territorial jurisdiction of Australia, and they do not apply to vessels that fall within the specified exclusions. The Act and instrument are subject to the legislative process under the Legislation Act 2003, which includes the requirement for disallowable legislative instruments to be compatible with human rights, as assessed by the Office of Impact Analysis.

Key Provisions

The Shipping Reform (Tax Incentives) (Specification of Kinds of Vessels) Instrument 2023 (the Instrument) is a legislative instrument made under section 10(5)(b) of the Shipping Reform (Tax Incentives) Act 2012 (the Act). It specifies the kinds of vessels that are not to be excluded from the tax incentives provided under the Act. The Instrument aims to refine the list of excluded vessels under subsection 10(4) of the Act by detailing the types of vessels that can benefit from the tax incentives. The Instrument commences on 1 October 2023, allowing entities to avail of the tax incentives for the relevant financial year concerning Australian registered vessels. It repeals and replaces the previous instrument, which sunset on 1 October 2023. The Instrument makes minor amendments to continue the specification of LNG tankers and gas carriers operating on international routes, as well as ro ro ferries operating on interstate routes, as kinds of vessels that are not to be excluded for the purposes of the Act. The Instrument imposes obligations on the entities seeking tax incentives under the Act. These entities must ensure that the vessels they operate meet the tonnage requirements and are registered vessels within the meaning of the Shipping Registration Act 1981. Additionally, the vessels must not fall within the list of excluded vessels specified in subsection 10(4) of the Act. To be eligible for tax incentives, entities must comply with the requirements outlined in section 10 of the Act and provide the necessary documentation and information to support their applications. The Instrument requires entities to accurately classify their vessels and provide evidence of their operations on the specified routes to substantiate their claims for tax incentives. Breach of the provisions of the Instrument may lead to civil or criminal consequences. While the Instrument itself does not specify explicit penalties, the Act provides a framework for enforcement. Entities that fail to comply with the eligibility criteria or provide false or misleading information in their applications may be subject to penalties under the relevant tax legislation, such as the Income Tax Assessment Act 1997. Penalties for providing false or misleading information can include fines and, in severe cases, criminal charges. Additionally, the Australian Taxation Office may audit entities to ensure compliance with the tax incentive provisions. Non-compliance may result in the revocation of tax incentives and the imposition of back taxes, interest, and penalties. It is essential for entities to adhere to the requirements of the Act and the Instrument to avoid potential legal and financial repercussions.

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Taxation Law
Environmental Law
Instrument
Instrument
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Definitions & Interpretation
Licensing & Registration
Regulatory Standards
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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.