Lazybugger
10-05-2006, 11:39 AM
Tax treatment for boat hire arrangements
[Set out below is the full text of the Minister for Revenue and the Assistant Treasurer's media release (No 022), issued on 9 May 2006, sourced from the Minister for Revenue and the Assistant Treasurer's site on the internet on 9 May 2006]
The Government has announced that it will amend the tax treatment of boat hire arrangements to allow taxpayers who cannot demonstrate that they are actually carrying on a business using a boat to claim deductions for costs related to their boating activity.
The current law imposes a test for allowing deductions that are related to income-earning activities associated with the use of boats whereby a taxpayer must be actually carrying on a business using the boat and not merely generating passive income.
The measure will allow taxpayers who cannot demonstrate that they are carrying on a business using a boat to:
deduct expenditure relating to their boating activity up to the level of income generated from their boating activity; and
allow any excess deductions to be carried forward and deducted against income from that boating activity in future years.
The measure will ensure that where taxpayers generate an income stream using their boat, they are not unfairly taxed while maintaining the restrictions on using the tax system to subsidise private use of boats.
The measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.
So what does that mean for the casual boatie or someone without a boat?
Well it creates the opportunity to rent out your boat when your not using it and claim the expenses. This would potentially include depreciation using the new 200 diminishing value rate (apportioned over a ratio of private to available for charter time). As mentioned in the press release you can't use this to make a tax loss to offset other income but it would be one method of decreasing the net cost of owning a boat.
I would think this sort of change could increase the number of schemes for large luxury cruisers rented out on something akin to a timeshare arrangement.
It also has potential advantages for non boat-owners as an increase in self-drive holiday boats might produce a little more competion and make something like the self drive Whitsunday yachts a little more economic.
Anyway if you or you and a couple of mates are looking to buy a boat, its something to take into account. But see your accountant first and really crunch the numbers.
Cheers
[Set out below is the full text of the Minister for Revenue and the Assistant Treasurer's media release (No 022), issued on 9 May 2006, sourced from the Minister for Revenue and the Assistant Treasurer's site on the internet on 9 May 2006]
The Government has announced that it will amend the tax treatment of boat hire arrangements to allow taxpayers who cannot demonstrate that they are actually carrying on a business using a boat to claim deductions for costs related to their boating activity.
The current law imposes a test for allowing deductions that are related to income-earning activities associated with the use of boats whereby a taxpayer must be actually carrying on a business using the boat and not merely generating passive income.
The measure will allow taxpayers who cannot demonstrate that they are carrying on a business using a boat to:
deduct expenditure relating to their boating activity up to the level of income generated from their boating activity; and
allow any excess deductions to be carried forward and deducted against income from that boating activity in future years.
The measure will ensure that where taxpayers generate an income stream using their boat, they are not unfairly taxed while maintaining the restrictions on using the tax system to subsidise private use of boats.
The measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.
So what does that mean for the casual boatie or someone without a boat?
Well it creates the opportunity to rent out your boat when your not using it and claim the expenses. This would potentially include depreciation using the new 200 diminishing value rate (apportioned over a ratio of private to available for charter time). As mentioned in the press release you can't use this to make a tax loss to offset other income but it would be one method of decreasing the net cost of owning a boat.
I would think this sort of change could increase the number of schemes for large luxury cruisers rented out on something akin to a timeshare arrangement.
It also has potential advantages for non boat-owners as an increase in self-drive holiday boats might produce a little more competion and make something like the self drive Whitsunday yachts a little more economic.
Anyway if you or you and a couple of mates are looking to buy a boat, its something to take into account. But see your accountant first and really crunch the numbers.
Cheers