TTM13150 - Partnerships: Operation of ships

75% limit on chartering in to partner: Example

Beau Ltd is a singleton tonnage tax company.  For the accounting period year ended 31 December 2013 it has:
 

• a 50% share in a corporate partnership, Beau-Geste Ferries,
• a 25% 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 bareboat 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 calculated as follows:
 

-		Beau-Geste Ferries	Beau-Regarde Ferries
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
Step Two	Tonnage chartered in (ton-days)	1 x 5,000 x 365 = 1,825,000	1 x 4,000 x 184 = 736,000
-	% chartered in	0.25	0.2
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
-	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
Step Four	Total share of tonnage operated	3,650,000 + 914,000 = 4,564,000 ton-days	-
-	Share of tonnage chartered in	912,500 + 182,800 = 1,095,300 ton-days	-
Step Five	Own tonnage	2 x 3,000 x 365 = 2,190,000	-
-	Total own and partnership tonnage	2,190,000 + 4,564,000 = 6,754,000 ton-days	-
-	Own and partnership tonnage chartered in	2,190,000 + 1,095,300 = 3,285,300 ton-days	-
Step Six	Aggregate percentage chartered in	48.64%	-
-	Apply 75% chartered in limit to Step Six result	Beau Ltd is below the 75% limit for this accounting period	-

References

75% limit on chartering in to partner  TTM13140