INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 57AM   SPECIAL DEPRECIATION ON TRADING SHIPS  

57AM(1)   [Definitions]  

In this section:

"commission"
, in relation to a trading ship, means put the ship into service, or hold the ship in reserve for the purpose of being put into service;

"commissioning date"
, in relation to a trading ship, means the date on which the ship is first commissioned;

"eligible date"
, in relation to an eligible Australian ship, means:

(a) in the case of a new ship:

(i) if the ship becomes an eligible Australian ship before the expiration of 90 days after the commissioning date of the ship - the commissioning date of the ship; or

(ii) in any other case - the day on which the ship becomes an eligible Australian ship;

(b) in the case of a post-July 1982 ship:

(i) if the ship becomes an eligible Australian ship before the expiration of 90 days after the commencement of this section - the commissioning date of the ship; or

(ii) in any other case - the day on which the ship becomes an eligible Australian ship; and

(c) in the case of a pre-July 1982 ship:

(i) if the ship becomes an eligible Australian ship before the expiration of 90 days after the commencement of this section - 29 July 1982; or

(ii) in any other case - the day on which the ship becomes an eligible Australian ship;

"Government ship"
means a ship that is owned by the Commonwealth or a State or Territory;

"Grants Act ship"
, in relation to a taxpayer, means a ship in respect of which the taxpayer is or was entitled to a grant under subsection 8(1) of the Ships (Capital Grants) Act 1987 ;

"harbour"
has the same meaning as in the Navigation Act 1912 ;

"lease"
, in relation to a trading ship, includes:

(a) any scheme under which a right to use the ship is granted by the owner to another person; and

(b) any scheme under which a right to use the ship, being a right derived directly or indirectly from a right referred to in paragraph (a), is granted by a person to another person,

but does not include a hire-purchase agreement;

"manning notice"
means a notice given by the Secretary under subsection (22) in relation to a ship;

"new"
means not having previously been either used by any person or acquired or held by any person for use by that person, but does not include reconditioned or wholly or mainly reconstructed;

"new ship"
means a trading ship the commissioning date of which occurs after the commencement of this section;

"officer"
includes the master of a ship;

"passenger"
has the same meaning as in the Navigation Act 1912 ;

"person"
includes a partnership and a person in the capacity of the trustee of a trust estate;

"post-July 1982 ship"
means a trading ship the commissioning date of which occurred on or after 29 July 1982 and before the commencement of this section;

"pre-December 1986 manning notice"
means:

(a) a manning notice given before 22 December 1986; or

(b) a manning notice given on or after that date where the request for the manning notice was made before that date;

or, if that notice is varied, that notice as varied;

"pre-July 1982 ship"
means a trading ship the commissioning date of which occurred on or after 29 July 1977 and before 29 July 1982;

"Secretary"
means the Secretary to the Department administered by the Minister for the time being administering the Navigation Act 1912 ;

"ship"
has the same meaning as in the Navigation Act 1912 ;

"trading ship"
means a ship that is used, or is held in reserve for use, for, or in connection with, any business or commercial activity and, without limiting the generality of the foregoing, includes a ship that is used, or is held in reserve for use, wholly or principally for the carriage of passengers or cargo for hire or reward, but does not include:

(a) a ship that is used, or is held in reserve for use, wholly or principally for the provision of services to ships or shipping, whether for reward or otherwise;

(b) a Government ship or ship that is, within the meaning of the Navigation Act 1912, a fishing vessel, an inland waterways vessel, a pleasure craft, an off-shore industry vessel or an off-shore industry mobile unit;

(c) a small craft within the meaning of the Shipping Registration Act 1981 ; or

(d) a ship that is used, or is held in reserve for use, wholly or principally within a harbour.

57AM(2)   [Ship used for private or domestic purpose]  

For the purposes of this section, a ship that is owned or is leased by a private company and is used at any time for a private or domestic purpose by:

(a) an employee of the company;

(b) a director of the company;

(c) a member of the company; or

(d) a relative of a person referred to in paragraph (a), (b) or (c);

shall be taken to have been used at that time by the company for a purpose other than the purpose of producing assessable income.

57AM(3)   [Interpretation of ``acquisition'' and ``depreciated value'']  

In this section:

(a) a reference to the acquisition of a ship by a person shall be read as including a reference to the construction of the ship for the person by another person or persons; and

(b) a reference to the depreciated value of a ship at the beginning of a year of income shall, if the depreciated value of the ship cannot be ascertained at that time, be read as a reference to the depreciated value of the ship at the first time during that year of income at which that value can be ascertained.

57AM(4)   [``Eligible Australian ship'' defined]  

For the purposes of this section, a pre-July 1982 ship, a post-July 1982 ship or a new ship owned by a taxpayer shall be taken to be an eligible Australian ship if:

(a) the taxpayer is a resident;

(b) the ship was constructed by, or acquired new by, the taxpayer and is for use by the taxpayer wholly and exclusively for the purpose of producing assessable income;

(ba) in the case of a ship that is a Grants Act ship of the taxpayer - the ship is delivered to the taxpayer, and registered under the Shipping Registration Act 1981, before 1 July 1997;

(c) depreciation is allowable to the taxpayer under section 54 in respect of the ship;

(d) in the case of a ship that is not a Grants Act ship of the taxpayer, the ship, when manned, is manned by persons each of whom is either a resident or a person in relation to whom a certificate issued under subsection (26) is in force;

(e) in the case of a pre-July 1982 ship, the ship:

(i) was, on 29 July 1982, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;

(ii) has not, at any time since that date, been registered in a country other than Australia; and

(iii) has, at all times since the commissioning date of the ship, been owned by the taxpayer;

(f) in the case of a post-July 1982 ship or a new ship, the ship:

(i) was, on the commissioning date of the ship, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;

(ii) has not, at any time since that date, been registered in a country other than Australia; and

(iii) has, at all times since that date, been owned by the taxpayer;

(g) where the ship is on lease to another person:

(i) the other person is a resident; and

(ii) the ship is for use by the other person wholly and exclusively for the purpose of producing assessable income; and

(h) either of the following conditions is satisfied:

(i) the ship is a Grants Act ship of the taxpayer;

(ii) the ship is used, or is held in reserve for use, in operations of a kind specified in a pre-December 1986 manning notice in force in relation to the ship and is not, when manned, manned at a level that exceeds the level specified in the notice for operations of that kind.

57AM(4A)   [A Grants Act ship]  

For the purposes of this section, but without limiting the generality of subsection (4), where:

(a) a taxpayer has been paid a grant under subsection 8(1) of the Ships (Capital Grants) Act 1987 in respect of a ship;

(b) either of the following conditions is satisfied:

(i) the taxpayer has become liable, under subsection 26(1) of that Act, to pay an amount in respect of the grant;

(ii) before the end of the last year of income in respect of which depreciation ascertained in accordance with this section would, apart from this subsection, be allowable to the taxpayer in respect of the ship, the taxpayer has become liable, under subsection 26(2) of that Act, to repay the amount of the grant; and

(c) the ship was an eligible Australian ship immediately before that liability was incurred;

the ship shall be taken to have ceased to be an eligible Australian ship:

(d) if subparagraph (b)(i) applies - when that liability was incurred; or

(e) if subparagraph (b)(ii) applies - before the end of 12 months after the day on which the ship became an eligible Australian ship.

57AM(4B)   [Commercial debt forgiveness]  

This section has effect subject to Division 245 of Schedule 2C .

57AM(5)   [Depreciation allowable]  

Notwithstanding anything contained in sections 55 and 56 , but subject to subsections 56(2) and (3) and to the provisions of this section, the depreciation allowable under this Act in respect of a ship that is an eligible Australian ship owned by a taxpayer in respect of the year of income in which the eligible date in relation to the ship occurred or a subsequent year of income shall be ascertained in accordance with this section.

57AM(6)   [Time for making election]  

A deduction is not allowable pursuant to this section to a taxpayer in respect of a ship unless:

(a) the taxpayer makes an election under subsection (29) in respect of the ship on or before the date of lodgment of his return of income for:

(i) in a case where a deduction would be allowable to the taxpayer in respect of a year of income pursuant to subsection (9) - that year of income; or

(ii) in any other case - the year of income in which the ship became an eligible Australian ship; and

(b) where the ship is on lease to another person - the other person makes an election under subsection (29) in respect of the ship on or before the date of lodgment of his return of income for the year of income:

(i) in a case where the lease was in force on the day on which the ship became an eligible Australian ship - in which that day occurred; or

(ii) in any other case - in which the lease was entered into,

or before such later date as the Commissioner allows.

57AM(7)   [Rate of depreciation]  

The depreciation allowable to a taxpayer under this Act in respect of an eligible Australian ship in respect of the year of income in which the eligible date in relation to the ship occurred or in respect of a subsequent year of income is:

(a) in the case of a new ship, or a post-July 1982 ship, the eligible date in relation to which is the commissioning date of the ship - 20% of the cost of the ship; or

(b) in any other case - 20% of the depreciated value of the ship at the beginning of the year of income in which the eligible date in relation to the ship occurred.

57AM(8)   [Loss of eligibility]  

If, at any time, an eligible Australian ship ceases to be an eligible Australian ship, depreciation ascertained in accordance with this section is not allowable in respect of the ship in respect of the year of income in which the ship ceases to be an eligible Australian ship or in respect of any subsequent year of income.

57AM(9)   [Deduction where ship not yet commissioned]  

Where:

(a) a taxpayer is, or is to be, the owner of a ship that has not yet been commissioned (including a ship in the course of construction);

(b) the taxpayer is a resident;

(c) the taxpayer has lodged with the Commissioner a declaration signed by the taxpayer on or before the date of lodgment of his return of income in respect of the year of income (in this subsection referred to as the ``relevant year of income'' ) immediately preceding the year of income in which the taxpayer predicts that the ship will be commissioned (in this subsection referred to as the ``succeeding year of income'' ):

(i) specifying the amount that the taxpayer estimates will be the cost of the ship (in this subsection referred to as the ``estimated cost of the ship'' );

(ii) specifying the year of income which will be the succeeding year of income; and

(iii) stating that the taxpayer will take all possible steps to ensure that the ship will become an eligible Australian ship before the expiration of 90 days after the commissioning date of the ship and to ensure that depreciation ascertained in accordance with paragraph (7)(a) will be allowable to the taxpayer in respect of the succeeding year of income and of each of the 3 next succeeding years of income;

(d) the estimated cost of the ship does not exceed the amount that, in the opinion of the Commissioner, will be the cost of the ship;

(e) the Commissioner is satisfied that depreciation ascertained in accordance with paragraph (7)(a) will be allowable to the taxpayer in respect of the ship in respect of the succeeding year of income and of each of the 3 next succeeding years of income; and

(f) the taxpayer has, before the expiration of the relevant year of income, expended moneys in acquiring or constructing the ship,

an amount equal to:

(g) in a case where the amount of the moneys so expended equals or exceeds an amount equal to 20% of the estimated cost of the ship - 20% of the estimated cost of the ship; or

(h) in any other case - the moneys so expended,

is allowable as a deduction to the taxpayer in respect of the relevant year of income.

57AM(10)   [Deduction for expenditure in year preceding eligible date]  

Where:

(a) a deduction has not been allowed and is not allowable to a taxpayer pursuant to subsection (9) in respect of an eligible Australian ship owned by the taxpayer;

(b) the ship is a new ship the eligible date in respect of which is the commissioning date of the ship; and

(c) the taxpayer had, before the expiration of the year of income (in this subsection referred to as the ``relevant year of income'' ) immediately preceding the year of income (in this subsection referred to as the ``succeeding year of income'' ) during which the eligible date in relation to the ship occurred, expended moneys in acquiring or constructing the ship,

an amount equal to:

(d) in a case where the amount of the moneys so expended equals or exceeds an amount equal to 20% of the cost of the ship - 20% of the cost of the ship; or

(e) in any other case - the moneys so expended,

is allowable as a deduction to the taxpayer in respect of the relevant year of income.

57AM(11)   [Deduction for expenditure in year preceding eligible date on ship commissioned before 1 July 1983]  

Where:

(a) the eligible date in respect of a post-July 1982 ship owned by a taxpayer is the commissioning date of the ship;

(b) the ship (being a ship the commissioning date of which occurred before 1 July 1983) is not a ship:

(i) the construction of which by the taxpayer commenced before 29 July 1982; or

(ii) that was acquired by the taxpayer under a contract entered into before 29 July 1982; and

(c) the taxpayer had, before the expiration of the year of income (in this subsection referred to as the ``relevant year of income'' ) immediately preceding the year of income (in this subsection referred to as the ``succeeding year of income'' ) during which the eligible date in relation to the ship occurred, expended moneys in acquiring or constructing the ship,

an amount equal to:

(d) in a case where the amount of the moneys so expended equals or exceeds an amount equal to 20% of the cost of the ship - 20% of the cost of the ship; or

(e) in any other case - the moneys so expended,

is allowable as a deduction to the taxpayer in respect of the relevant year of income.

57AM(12)   [Deduction deemed to be depreciation]  

A deduction allowed or allowable to a taxpayer in respect of a ship pursuant to subsection (9), (10) or (11) shall, for the purposes of this Act other than subsection (7), be taken to be an amount of depreciation allowed or allowable to the taxpayer in respect of the ship.

57AM(13)   [No deduction under subsec (9) where depreciation not allowable]  

Where:

(a) a deduction (in this subsection referred to as the ``relevant deduction'' ) has been allowed or would, but for this subsection, be allowable to a taxpayer pursuant to subsection (9) in respect of a ship in respect of a year of income; and

(b) depreciation ascertained in accordance with paragraph (7)(a) is not allowable to the taxpayer in respect of the ship in respect of the next succeeding year of income,

the relevant deduction shall be taken not to be allowable and never to have been allowable to the taxpayer.

57AM(14)   [Variation to deduction under subsec (9) where estimate of cost incorrect]  

Where a deduction (in this subsection referred to as the ``relevant deduction'' ) has been allowed or would, but for this subsection, be allowable to a taxpayer pursuant to subsection (9) in respect of a ship in respect of a year of income (in this subsection referred to as ``the relevant year of income'' ) and:

(a) in a case where the relevant deduction was allowed or would be allowable pursuant to paragraph (9)(g):

(i) the amount that the taxpayer estimated, for the purposes of subsection (9), would be the cost of the ship (in this subsection referred to as the ``estimated cost of the ship'' ) exceeds the cost of the ship; or

(ii) the estimated cost of the ship is less than the cost of the ship and the amount of the moneys expended referred to in that paragraph is greater than an amount equal to 20% of that estimated cost; or

(b) in a case where the relevant deduction was allowed or would be allowable pursuant to paragraph (9)(h) - the estimated cost of the ship exceeds the cost of the ship and the amount of the moneys expended referred to in that paragraph exceeds an amount equal to 20% of the cost of the ship,

the relevant deduction shall be taken not to be allowable and never to have been allowable to the taxpayer and an amount equal to:

(c) in a case to which subparagraph (a)(i) applies - 20% of the cost of the ship;

(d) in a case to which subparagraph (a)(ii) applies - 20% of the cost of the ship or the amount of the moneys expended, whichever is the less; or

(e) in a case to which paragraph (b) applies - 20% of the cost of the ship,

shall be taken to be allowable as a deduction to the taxpayer pursuant to subsection (9) in respect of the ship in respect of the relevant year of income.

57AM(15)   [Loss of eligibility within 12 months]  

This section does not apply, and shall be taken never to have applied, in relation to an eligible Australian ship owned by a taxpayer if, before the expiration of 12 months after the day on which the ship became an eligible Australian ship, the ship ceased to be an eligible Australian ship.

57AM(16)   [Depreciation where taxpayer intends ship to become ineligible]  

Where:

(a) depreciation ascertained in accordance with this section has been allowed, or would but for this subsection be allowable, in respect of an eligible Australian ship owned by a taxpayer;

(b) after the expiration of 12 months after the day on which the ship became an eligible Australian ship and before the expiration of the last year of income in respect of which depreciation ascertained in accordance with this section would, but for this subsection, be allowable to the taxpayer in respect of the ship, the ship ceased to be an eligible Australian ship; and

(c) the Commissioner is satisfied that, at the time when the ship became an eligible Australian ship, the taxpayer intended that the ship would cease to be an eligible Australian ship during the period referred to in paragraph (b),

any depreciation ascertained in accordance with this section shall, if the Commissioner so determines, be taken not to have been, or not to be, allowable, as the case may be.

57AM(17)   [No loss of eligibility where disposal to related company]  

Subsection (15) does not apply in relation to a ship ceasing to be an eligible Australian ship by reason of the disposal of the ship by a taxpayer being a company, being a disposal occurring before the expiration of the period of 12 months after the day on which the ship became an eligible Australian ship, if -

(a) the disposal by the taxpayer was to another company (in this subsection referred to as the ``transferee'' ) that was, at the time of the disposal, related to the taxpayer;

(b) the ship was not, at any time (in this paragraph referred to as the ``relevant time'' ) during that period of 12 months, owned by a person other than -

(i) in a case where the transferee was the holding company of the taxpayer - the transferee or a company related to the transferee at the relevant time;

(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer - the taxpayer or a company related to the taxpayer at the relevant time;

(iii) in a case where the transferee was a wholly-owned subsidiary of another company (in this subparagraph referred to as the ``holding company'' ) of which the taxpayer was also a wholly-owned subsidiary - the holding company or a company related to the holding company at the relevant time; or

(iv) in a case where the transferee was a wholly-owned subsidiary of other companies (in this subparagraph referred to as the ``parent companies'' ) of which the taxpayer was also a wholly-owned subsidiary - a company that, at the relevant time, was a wholly-owned subsidiary of the parent companies; and

(c) at any time during that period of 12 months when the ship was owned by -

(i) in a case where the transferee was the holding company of the taxpayer - the transferee;

(ii) in a case where the transferee was a wholly-owned subsidiary of the taxpayer - the taxpayer; or

(iii) in a case where the transferee was a wholly-owned subsidiary of another company of which the taxpayer was also a wholly-owned subsidiary - that other company,

the transferee, the taxpayer, or that other company, as the case may be, was an eligible public company in relation to the year of income in which that time occurred.

57AM(18)   [Eligibility where court dissolves company]  

Where -

(a) pursuant to an order of a court made under the law of a State or Territory relating to companies -

(i) the whole of the undertaking, property and liabilities of a company (in this subsection referred to as the ``relevant company'' ) is vested in another company (in this subsection referred to as the ``substituted company'' );

(ii) the persons who beneficially owned shares in the relevant company become the beneficial owners of all of the shares in the substituted company without reduction in their respective interests; and

(iii) the relevant company is dissolved; and

(b) for the purpose of the application of subsection (17), the relevant company is the transferee referred to in subparagraph (17)(b)(i), the taxpayer referred to in subparagraph (17)(b)(ii), the holding company referred to in subparagraph (17)(b)(iii) or one of the parent companies referred to in subparagraph (17)(b)(iv),

paragraphs (17)(b) and (c) apply, in relation to any time after the time when the conditions specified in paragraph (a) of this subsection were satisfied, as if the substituted company were the transferee, the taxpayer, that holding company or that parent company, as the case may be.

57AM(19)   [Interpretation]  

Subsections 82AJA(3), (4), (5), (6), (7) and (8) apply for the purposes of the interpretation of subsections (17) and (18).

57AM(20)   [Request for manning notice]  

A person who is, or is to be, the owner of a ship (including a ship in the course of construction or a ship the construction of which has not yet commenced), or a person authorized for the purpose by the first-mentioned person may, by notice in writing given to the Secretary, request the Secretary to give a manning notice in relation to the ship.

57AM(21)   [Details to be included in request]  

A request pursuant to subsection (20) or (23) in relation to a ship shall include a statement setting out -

(a) the specifications of the ship (including a plan of the accommodation layout of the ship);

(b) details of the kinds of operations in which the ship is, or is to be, engaged; and

(c) the number of officers of specified designations and the number of members of the crew of specified designations with which the ship is being, or is proposed to be, manned while engaged in each of the kinds of operations referred to in paragraph (b).

57AM(22)   [Secretary to give opinion on manning]  

The Secretary shall, after receiving a request made pursuant to subsection (20) in relation to a ship, give a notice in writing by post to the person who made the request setting out, in relation to each kind of operations in which the ship is, or is to be, engaged, the number of officers and members of the crew with which the ship should, in the opinion of the Secretary, be manned to enable the ship to be operated in a safe and efficient manner while engaged in operations of that kind.

57AM(23)   [Variation of manning notice]  

A person who is, or is to be, the owner of a ship (including a ship in the course of construction or a ship the construction of which has not yet commenced) in relation to which a manning notice is in force, or a person authorized for the purpose by the first-mentioned person, may, by notice in writing given to the Secretary, request the Secretary to vary the manning notice and, where the Secretary receives such a request and is satisfied that the manning notice in force in relation to the ship is no longer appropriate by reason of -

(a) a proposed change in the operations in which the ship is, or is to be, engaged; or

(b) a proposed modification of the ship,

the Secretary shall give a notice in writing by post to the person who made the request varying the manning notice.

57AM(24)   [When manning notice to be given]  

A manning notice or notice of a variation of a manning notice shall be given by the Secretary before the expiration of 70 days after -

(a) in a case where notice of the request pursuant to subsection (20) or (23), as the case may be, is given to the Secretary before the commissioning date of the ship - the commissioning date of the ship; or

(b) in any other case - the day on which notice of the request pursuant to subsection (20) or (23), as the case may be, is given to the Secretary.

57AM(25)   [Operative date of manning notice]  

A manning notice or a variation of a manning notice comes into force on the day on which the notice or notice of the variation, as the case may be, is given.

57AM(26)   [Certificate authorising employment of non-resident]  

Where the Secretary is satisfied that -

(a) a person possessing particular skills is required to be employed or engaged on a trading ship at a particular time; and

(b) a resident possessing those skills is not available to be employed or engaged on the ship at that time,

the Secretary may, on application in writing made to him by the owner or lessee of the ship or by a person authorized for the purpose by the owner or lessee, being an application that specifies a particular person (not being a resident) who possesses those skills, issue to the person who made the application a certificate authorizing the employment or engagement on the ship of that person for a specified period.

57AM(27)   [Expiration of certificate]  

A certificate issued under subsection (26) ceases to be in force at the expiration of the period specified for the purpose in the certificate.

57AM(28)   [Period of certificate]  

In specifying a period in a certificate issued under subsection (26), the Secretary shall have regard to the likelihood of a resident with the particular skills required becoming available to be employed or engaged on the ship concerned.

57AM(29)   [Election that income assessable]  

A taxpayer may make an election that all income derived by the taxpayer from the use by the taxpayer of a particular ship will be assessable income for the purposes of this Act.

57AM(30)   [Section 23(r) not to apply]  

Where a taxpayer makes an election under subsection (29), paragraph 23(r) shall be taken not to apply and never to have applied in relation to income derived by the taxpayer from the use by the taxpayer of the ship during any year of income in respect of which depreciation ascertained in accordance with this section has been allowed or is allowable to the taxpayer or to another person in respect of the ship.

57AM(31)   [Meaning of income]  

In subsections (29) and (30), a reference to income derived by a taxpayer from the use of a ship shall be read as including a reference to income derived by the taxpayer from the granting of a lease of the ship.

57AM(32)    

57AM(33)   [Commissioning date and deduction where taxpayer leases ship acquired from lessee]  

Where -

(a) a taxpayer leases to another person (in this subsection referred to as the ``lessee'' ) a trading ship acquired by the taxpayer from the lessee;

(b) the commissioning date of the ship occurred on or after 29 July 1977;

(c) the ship was constructed or acquired new by the lessee and had, since its commissioning date and prior to its being acquired by the taxpayer, been owned by the lessee;

(d) the period between the commissioning date of the ship and the date on which it was acquired by the taxpayer did not exceed 6 months;

(e) the Commissioner is satisfied that the acquisition or construction of the ship by the lessee, the acquisition of the ship by the taxpayer from the lessee and the leasing of the ship by the taxpayer to the lessee occurred in pursuance of a contract or arrangement entered into at arm's length;

(f) in the case of a pre-July 1982 ship, the ship -

(i) was, on 29 July 1982, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;

(ii) has not, at any time since that date been registered in a country other than Australia; and

(iii) has, at all times since it was acquired by the taxpayer, been owned by the taxpayer; and

(g) in the case of a post-July 1982 ship or a new ship, the ship -

(i) was, on the commissioning date of the ship, registered under the Shipping Registration Act 1981 and that registration has, at all times since that date, remained in force;

(ii) has not, at any time since that date been registered in a country other than Australia; and

(iii) has, at all times since it was acquired by the taxpayer, been owned by the taxpayer,

then -

(h) for the purposes of this section, the ship shall be taken to have been acquired new by the taxpayer and the commissioning date of the ship shall be taken to be the date on which the taxpayer acquired the ship from the lessee;

(ha) if the lessee is or was entitled to a grant in respect of the ship under subsection 8(1) of the Ships (Capital Grants) Act 1987 :

(i) the ship shall be treated, for the purposes of this section, as if it were a Grants Act ship of the taxpayer;

(ii) paragraph (4)(ba) applies in relation to the ship as if the second reference in that paragraph to the taxpayer were a reference to the lessee; and

(iii) subsection (4A) applies in relation to the ship as if a reference in paragraph (a) of that subsection to the taxpayer were a reference to the lessee; and

(j) a deduction pursuant to subsection (9), (10) or (11) is not allowable in respect of the ship.

57AM(34)   [Cost of ship where non-arm's length transaction]  

For the purpose of ascertaining the depreciation allowable to a taxpayer pursuant to this section in respect of an eligible Australian ship, where -

(a) the amount that, but for this subsection, would be the cost of the ship for the purposes of this section is attributable, in whole or in part, to a transaction to which the taxpayer was a party; and

(b) the Commissioner is satisfied that -

(i) having regard to any connection between any 2 or more of the parties to the transaction and to any other relevant circumstances, those parties were not dealing with each other at arm's length in relation to the transaction; and

(ii) the amount that, but for this subsection, would be the cost of the ship for the purposes of this section is greater than the amount (in this subsection referred to as the ``arm's length amount'' ) that would have been the cost of the ship for the purposes of this section if the parties to the transaction had dealt with each other at arm's length in relation to the transaction,

the arm's length amount shall be taken to be the cost of the ship for the purposes of this section.