TAXATION RULING NO. ST 2196

ST 2196

SALES TAX : SHIPS AND OTHER VESSELS - EFFECT OF 1985 AMENDMENTS

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FOI status:

PREAMBLE

Prior to 20 September 1985, sub-item 119(1) in the First Schedule to the Sales Tax (Exemptions and Classifications) Act exempted from sales tax ships and other vessels, other than those to be used exclusively or principally for purposes of pleasure, sport or recreation either by the owner thereof or by any other person or persons whether or not in accordance with a charter or other hiring agreement or otherwise for reward. Vessels used as ferries for scheduled public passenger transport and water taxis were exempt under this item. So also were vessels used for accommodation or private transport.

2. An anomaly existed in the administration of sub-item 119(1) in that, while it did not exempt from sales tax ships and other vessels to be used for pleasure, sport or recreation, it did not prevent exemption being available for ships and other vessels to be used for broadly similar purposes, e.g. large pleasure craft used as residential accommodation and vessels used for private transport to and from work.

3. With effect from 20 September 1985 the anomaly has been removed. Sub-item 119(1) has been extended to exclude from exemption vessels used exclusively or principally for purposes of private transport or accommodation.

4. A new sub-item 119(1AA) has also been introduced with effect from 20 September 1985. It exempts from sales tax :-

Ships and other vessels to be used exclusively or principally -

(a)

by the relevant owner or owners (as defined)

(b)

in the course of a business carried on by the relevant owner or relevant owners, being a business having as its object, or as one of its objects, the providing, for the public, of transport of passengers for reward otherwise than on sight-seeing tours; and

(c)

for the purpose of providing, for the public, transport of passengers for reward otherwise than on sight-seeing tours

RULING

5. The effect of the amendment to sub-item 119(1) is that vessels used for the purpose of private transport or accommodation are now taxable at the general rate of 20%.

6. The purpose of sub-item 119(1AA) is to ensure that vessels, such as water taxis and ferries, used in the course of carrying on a business of providing public transport for reward otherwise than on sight-seeing tours, which were previously exempt under sub-item 119(1), remain exempt from sales tax. Sub-item 119(1AA) does not extend the exemptions available prior to 20 September 1985. It does not, for example, exempt charter vessels which did not qualify for exemption under the former sub-item 119(1). Nor are those charter vessels exempt under new sub-item 119(1AA).

COMMISSIONER OF TAXATION
2 January 1986

References

ATO references:
NO 84/5325-0

Subject References:
SHIPS
VESSELS

Legislative References:
SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) ACT; ITEM 119, FIRST SCHEDULE