Tax Offset for Merchant Seaman - Lets Get It Applied to Pilots
Yesterday the Minister for Transport introducted the Tax Laws Amendment (Shipping Reform) Bill 2012 to the House. Amongst other things it introduces a tax offset for Australians employed internationally in shipping. The quote from the Minister is:
'It makes no sense that an Australian seafarer working on a ship in the Port of London should pay Australian income tax while an Australian working as a bartender in a pub in London does not. This creates a disincentive for hiring Australian seafarers in international trade. Consequently, the bill provides for a refundable tax offset for employers of Australian resident seafarers. The seafarer tax offset provides an incentive for a company to employ Australian seafarers on overseas voyages. This will also provide Australian seafarers with the opportunity to develop their maritime skills on ships operating in international trade. For an employer to qualify for the offset, the seafarer must have served on overseas voyages for at least 91 days in the income year on an eligible vessel.'
The key point here appears to be that the Government supports the idea of an Australian being employed overseas and not paying Australian tax rates, even though when they are not working they reside in Australia.
This would seem to be similar to a pilot being employed by, say, Tiger in Singapore. They work more than 91 days in Singapore (or flying to other international destinations) and are paid based on Singapore tax rates. But if they have their family in Australia and regularly visit home the ATO will consider them an Australian resident and tax them the difference between what they have been taxed by the Singapore Govt and what they would have been taxed by the Australian Govt if they were working full time in Australia.
The Ministers comment that 'This will also provide Australian seafarers with the opportunity to develop their maritime skills on ships operating in international trade' seems particularly applicable at a time when companies are seeking 457 visas for pilots as there are, apparently, not enough Australian pilots in Australia with the right experience. There are a number of airlines such as Jetstar Asia, Tiger etc who will happily employ Australian pilots and there are Australians happy to be employed by them but don't want to be stung with the extra tax from the ATO. Naturally the company position is that this is a personal issue between the pilot and the ATO.
Now I know not every PPRuNe member is a big fan of the current Govt or Minister but nevertheless maybe it is time to push this with a Govt that is suppossed to be pro-worker and pro-union.
What I think is this Labor government, just like past ones, has an illogical but passionate hatred of lazy, glamor boy, playboy pilots and there is not a hope in hell of us getting any such concessions until the Australian industry is so stuffed down the shitta it's non existent. Bit like where the maritime industry had to get to but probably more so by a factor of 10.
Folks, The whole history of how expat Australians, and seamen in particular have been taxed over the years is a very interesting one, the rot really set in with the Whitlam government in 1972. Prior to that, seamen only paid tax on that proportion of their income gained in Australian territorial waters --- ie; if they were in the international trade, they paid almost no tax.
The Whitlam era also severely changed the definitions of an Australian resident for tax purposes, and also introduced the "principle" that Australian expats, if they ever wanted to return to live in Australia, had to pay the greater of Australian income tax or the resident tax where they were domiciled.
The definitions of an Australian resident for tax purposes ( which does not mean simple residence in Australia) has been fiddled around by successive governments --- on the advice of the ATO, many times, never to the benefit of the taxpayer ---- unless you are on the government payroll ---- have a look at wonderful tax deals for the mob working for AusAid.
What is proposed for seamen looks like it is very close to the expat (but not seamen) tax situation before Whitlam.
Any expat must take very careful tax advice, to not do so can cause quite extraordinary tax bills, as some ex-RAAF pilots working for the Sultan of Oman's air force, found out in the most distressing way. when they returned to Australia.
Unfortunately, no Liberal/National government ever saw fit to reverse this particular ratbag tax increase by the Whitlam government.
What should also be looked at is the changes the government is making to the depreciation treatment of Australian flagged shipping. Internationally uncompetitive depreciation rate is a cost impost on Qantas that significantly adds to Qantas costs, vis a vie most of the international competition.
Folks, start lobbying hard for Australian aircraft to be treated the same way as Australian shipping, where Albo realized Australian shipping could never be competitive with Australia's tax structure --- so it was changed!!
What us Albo banging on about? I'd have to research this better, to see the complete context, and really have no interest in doing so on Saturday morning. But is he talking about a benefit, a tax offset, to the EMPLOYER or the EMPLOYEE? He makes reference to both parties. I am reading this as a proposed benefit to the EMPLOYER, to make it more attractive to hire more expensive Australians. Now that doesn't necessarily translate as the employee paying less tax!
These politicians make an art of sounding good for political purposes but when you study what they are really saying and meaning....
Ushuaia - the move is part of a broader package that includes the tax incentive for ship owners to register their fleets in Australia and employ Australian crew as opposed to registering a ship in some west african republic and employing third world crew on a bowl of rice a day.
Unfortunately the fifth and sixth freedoms are included in the bilateral & FTA agreements Australia makes with its trading partners.. potential trading/defence partners for the US. Sadly it's the norm with only a handful of countries precluding aviation as an automatic 'given' in the FTAs and bilaterals.
Australian maritime may benefit but its a very long shot - sadly however there is little chance of anything even remotely similiar for aviation. The furthest that the aviation debate will ever go is a well frequented cafe in Manuka.
The senile debate in the House this week on the 'Dixon/Joyce I still call my wallet Australia Bill' is a clear demonstration of blind policy.
Jed, might be worth a try but as the Act specifically applies to ships not aircraft the ATO would, I think, be reluctant to part with our cash.
In regard to the employer/ employee issue, my understanding is that this referes to the employer withholding tax to pass to the ATO. I believe this is how the process used by employers in Australia is described and how your tax usually gets paid. Ideally a foreign employer would withhold the correct Australian tax if if you are an Australian taxpayer. Of course in practice this usually does not happen and you get hit up for the difference later.
The incentive for the employer is that they can genuinely advertise for Australians, pay them the same pay as a local employee, and know that the take home amount is competitive. How many people looked at Jetstar Asia and then immediately discounted that as an option because the numbers didn't work paying Australian tax rates.
So, you guys are saying that the hard working taxpayers of Australia should support a tax break that benefits Jetstar Asia employees, and hence their employer, and other overseas operators too? Does not that just provide a further incentive to 'offshore' all remaining Australian aviation, to the detriment of existing Australian 'onshore' employers? As far as I can see, if this came in to aviation, it would just about guarantee that there would be no pilots living in Australia a few years from now, at least in some sections of the industry, e.g. international ops and make it a no brainer that domestic ops would all be crewed as tag-on sectors of international operations, by Emirates, Jetstar Asia, Far Q or the like. Be careful what you wish for.
Mud Skipper, not all Labor MP's think pilots are lazy, Glamour Boy Playboy's. Bob Hawke once famously described pilots as "nothing but glorified bus drivers", and he didn't mean Airbus aircraft drivers.