TTM13150 - Partnerships: Operation of ships
75% limit on chartering-in to partner: Example
Beau Ltd is a singleton tonnage tax company with, for the accounting period year ended 31 December 2006:
- a 50% share in a corporate partnership, Beau-Geste Ferries,
- a 25% share in another corporate partnership, Beau-Regarde Ferries, and
- two 3,000-ton vessels (time-chartered-in), which it operates on its own account.
Beau-Geste Ferries operates four 5,000-ton vessels, of which:
- three are bare boat chartered-in, and
- one held on a time charter for the whole of the 12-month accounting period.
Beau-Regarde Ferries operates two vessels:
- one 8,000-ton vessel bareboat chartered-in for the whole of the 12-month accounting period, and
- one 4,000-ton vessel time chartered-in for the last 6 months of the accounting period.
Beau Ltd’s percentage of chartered-in tonnage is worked out as follows:
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Beau-Geste Ferries |
Beau-Regarde Ferries |
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Step One |
Aggregate Tonnage (in ton-days) |
4 x 5,000 x 365= 7,300,000 |
(8,000 x 365) + (4,000 x 184) = 3,656,000 |
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Step Two |
Tonnage chartered in (ton-days) |
1 x 5,000 x 365 = 1,825,000 |
1 x 4,000 x 184 = 736,000 |
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% chartered in |
25% |
20% |
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Step Three |
Share in partnership property |
50% x 7,300,000 = 3,650,000 ton-days |
25% x 3,656,000 = 914,000 ton-days |
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Allocation of chartered-in tonnage in Step 2 |
25% x 3,650,000 = 912,500 ton days |
20% x 914,000 = 182,800 ton days |
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Step Four |
Total share of tonnage operated |
3,650,000 + 914,000 = 4,564,000 ton days |
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Share of tonnage chartered-in |
912,500 + 182,800 = 1,095,300 ton days |
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Step Five |
Own tonnage |
2 x 3,000 x 365 = 2,190,000 |
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Total own and partnership tonnage |
2,190,000 + 4,564,000 = 6,754,000 ton days |
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Own and partnership tonnage chartered- in |
2,190,000 + 1,095,300 = 3,285,300 ton days |
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Step Six |
Aggregate percentage chartered- in |
48.64% |
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Apply 75% test to Step Six result |
Beau Ltd is below the 75% limit for this accounting period |
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References
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75% limit on chartering-in to partner |
