Shipping Australia Limited
7 November 2001
Commonwealth Government Inquiry into Fuel Taxation
Submission by Shipping Australia Limited
We regret the delay in forwarding a brief submission to you regarding the above inquiry, as we fully appreciate that the deadline for submissions has long expired, but we understand from the Australian Shipowners' Association (ASA) that the Chairman of the Inquiry, Mr. David Trebeck, has indicated that there is still some limited time for Shipping Australia Ltd to make a submission.
We will therefore keep this submission as brief as possible, but there are a number of issues we would like to raise, and in particular reinforce the comment in the ASA submission regarding problems arising from the delay in receiving the rebate, having paid duty on the fuel.
We should explain that Shipping Australia Ltd (SAL) was formed in July of this year as a result of a merger between the Australian Chamber of Shipping Ltd and Liner Shipping Services Ltd. SAL represents 26 full members and 11 contributory members, and attached is a list of that membership. There are also 33 associate members, either corporate or individual.
SAL membership includes both Australian and international shipowners and agency companies. Members are involved in dry bulk, tanker, liner and passenger shipping, as well as pure car carriers.
Diesel Fuel Rebate Scheme
Under the Customs Act, foreign shipowners being granted a single voyage permit to carry cargo on the Australian coast are required to pay duty on bunkers if the vessel deviates from its intended voyage to carry domestic cargo either interstate or intrastate. Whilst permits under the Navigation Act are issued only if the vessel carries cargo interstate, as the vessel's bunkers are imported for the purpose of the voyage then they are dutiable. Since the rules were amended in October 2000, when the 10% rule was abandoned, foreign vessels are now
liable to pay this duty on bunkers, but given that the full duty is then rebated it would appear that not all vessels liable to pay the duty are in fact doing so.
The foreign shipowner is required to pay a large amount of money by way of bunker duty well before the rebate under the Diesel Fuel Tax Rebate Scheme (DFRS) for the bunkers consumed while on the domestic voyage. At attachment B is a calculation for a typical vessel, and you will see that the amount of the duty paid was $75,321.15, which equated to the amount claimed for rebate. However, the foreign shipowner, as well as having to fund the duty payment well before receiving the rebate also has exposure to the risk of exchange rate fluctuations, which may not be compensated for by the level of the rebate. The benefit to the Commonwealth Government of this scheme is difficult to comprehend, given the administrative costs involved.
You may also note in the attached the considerable amount of GST payable, but this is deferred to ensure that an input tax credit is made in the same month and therefore there is no cash outlay.
Similar to the ASA, it is SAL's submission that the duty on diesel and light fuels used by shipowners, ship operators, ship managers and towage service providers be abolished.
We are happy to assist on any matter on which you may require elaboration.
SHIPPING AUSTRALIA LIMITED MEMBERS (as at 7 November 2001)
Adsteam Marine Limited
Compagnie Martime Marfret
CORPORATE ASSOCIATE MEMBERS
Albany Port Authority
INDIVIDUAL ASSOCIATE MEMBERS
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