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Thursday, 29 May 1997
Page: 3966


Senator PARER (Minister for Resources and Energy)(11.57 a.m.) —When we adjourned last, Senator Murray had asked me some questions with regard to shipping. I inform Senator Murray that the legislative basis for not collecting customs duties and excise on fuel used by a vessel on an international voyage is section 130 of the Customs Act. This exemption is longstanding practice and is understood to be consistent with international practice. Given that domestic legislation is not applicable to flagged foreign vessels in international waters, it is not appropriate to levy Australian taxes on fuel uplifted by vessels and to be used during an international voyage.

The 1987 High Court decision in BP, Shell and the Collector WA confirmed that an international voyage from Australia required a vessel to be on a voyage to a place outside Australia. The consequence being that a vessel departing an Australian port for an area of water outside of Australia—for example, fishing grounds—irrespective of the distance travelled, has not undertaken an international voyage and is not entitled to the exemption of customs duties and excise if it returns to Australia. Annex A(4) of the Kyoto convention deals with ship stores including the tax free treatment of fuel so long as it is not discharged. While Australia has acceded to the Kyoto convention, it is not a signatory to annex (4).

There is another point that I think is worth making with regard to excise on fishing vessels—that is, the amendment would actually deprive certain Australian fishing operators of the diesel fuel rebate. The point is that not all Australian fishing vessels are required to be on the Australian register, unless they make overseas voyages. As a result, a number of Australian fishing vessels are not on the register. Therefore, the amendment would prevent Australian fishing operators from receiving the benefit of the DFRS. I think you pointed this out, Senator, in your remarks, but the Japanese fishing vessels operating in international waters purchase duty free bunker oil and do not receive the DFRS, and the amendment would not result in these vessels paying excise.