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Old 11-08-2015, 10:15   #1
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Any Canadians Using Their Boat as a Business?

I'm looking for advise regarding the set-up of a business in which a sail boat is purchased and used for both chartering and personal use in the Caribbean. I'm looking for ways to obtain an income stream from some chartering, and a way to legally deduct appropriate expenses as a business with Revenue Canada. Any advise or tax consultant referrals are welcome and appreciated.
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Old 11-08-2015, 14:05   #2
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Re: Any Canadians Using Their Boat as a Business?

I don't use my boat for commercial purposes, but I used to do compliance consulting for those who did. So I know a bit about it, especially from a regulatory perspective. Any specific questions?

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Old 11-08-2015, 15:54   #3
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Re: Any Canadians Using Their Boat as a Business?

Hi. I don't have many specific questions other than:
1. Can a yacht be set up outside of Canada as a business and recognized as so by Revenue Canada?
2. Has it been done, and are there precidents and examples?
3. Are there any unique factors that need to be addressed versus a "regular" small business in Canada?
Thanks.
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Old 11-08-2015, 17:03   #4
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Re: Any Canadians Using Their Boat as a Business?

I know of a couple of examples where boats have been used in Canada and the carribean as business's, its not very common or easy. A good example is "Boatel" out of Toronto. The problem is when in Canada they can only work as a B&B. You might be able to contact them through their website. They are very friendly people.

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Old 12-08-2015, 09:00   #5
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Re: Any Canadians Using Their Boat as a Business?

Are you flying a Canadian Flag or are you registered offshore? This will affect how you are reporting. If you are creating an operating loss to offset your other income, you are more likely to have issues with CRA. If you are showing a profit, they will be happy to take the tax dollars.
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Old 12-08-2015, 09:40   #6
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Re: Any Canadians Using Their Boat as a Business?

Quote:
Originally Posted by SailCatCruiser View Post
Hi. I don't have many specific questions other than:
1. Can a yacht be set up outside of Canada as a business and recognized as so by Revenue Canada?
2. Has it been done, and are there precidents and examples?
3. Are there any unique factors that need to be addressed versus a "regular" small business in Canada?
Thanks.
1- yes
2- I do sinse 2009
3-yes I run that has a small business

I work with charter compagnie with a business agreement.

are you planning to work by your own and live aboard? if yes I can't help you!

if you need more info pm me
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Old 12-08-2015, 10:57   #7
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Re: Any Canadians Using Their Boat as a Business?

Post your question here:
This forum is sponsored by The Charter Yacht Society of the BVI. Established in 1982, the CYS is the voice of the crewed yacht industry in the Virgin Islands. For more information about the CYS visit our website located at Charter Yacht Society BVI or email us direct at cysofbvi@surfbvi.com

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Old 12-08-2015, 11:34   #8
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Re: Any Canadians Using Their Boat as a Business?

Your best bet might be to do it the way that folks in the US have done with planes and boats for years. Your tax men will be looking for an "arm's length" relationship. The further apart you and the "business" are, the more they will accept it as not being some kind of commingling and cheating.


So you set up a business corporation, the corporation owns the boat, the corporation hires a full-time independent manager or other agency to advertise, charter, and maintain the boat. It is a business and you have nothing to do with it, except for being the 100% stockholder and doing the hiring.


When you want to use the boat, you charter it just like anyone else does, at the same price that anyone else pays. If you have set up a legitimate business and it is making money on every charter, the money you've paid comes back to you in profit, so you really are getting a break on the "final" price. But in the eyes of the tax man, it is still a bonafide arm's length business transaction.


Now, if you also set up some clause allowing corporate officers to bump other charterers on the calendar, or give yourself other privileges...you might want professional advice as to what is acceptable. Or, just verbally tell you charter agent "Before you take any bookings for the month of xxx, confirm the availability with me."


Obviously, it can be simpler to put a yacht in charter with an established company, rather than trying to compete with them. You'd probably find a number of second-tier companies that are willing to take any "reasonable" boat rather than a specific tailor0-made one for their fleet, too.
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Old 12-08-2015, 11:43   #9
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Re: Any Canadians Using Their Boat as a Business?

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Originally Posted by hellosailor View Post
Your best bet might be to do it the way that folks in the US have done with planes and boats for years. Your tax men will be looking for an "arm's length" relationship. The further apart you and the "business" are, the more they will accept it as not being some kind of commingling and cheating.


So you set up a business corporation, the corporation owns the boat, the corporation hires a full-time independent manager or other agency to advertise, charter, and maintain the boat. It is a business and you have nothing to do with it, except for being the 100% stockholder and doing the hiring.


When you want to use the boat, you charter it just like anyone else does, at the same price that anyone else pays. If you have set up a legitimate business and it is making money on every charter, the money you've paid comes back to you in profit, so you really are getting a break on the "final" price. But in the eyes of the tax man, it is still a bonafide arm's length business transaction.


Now, if you also set up some clause allowing corporate officers to bump other charterers on the calendar, or give yourself other privileges...you might want professional advice as to what is acceptable. Or, just verbally tell you charter agent "Before you take any bookings for the month of xxx, confirm the availability with me."


Obviously, it can be simpler to put a yacht in charter with an established company, rather than trying to compete with them. You'd probably find a number of second-tier companies that are willing to take any "reasonable" boat rather than a specific tailor0-made one for their fleet, too.
I think this is sound advice. Where people often run into trouble, not just with CRA, but also TC is trying to use their pleasure craft as a business and vice versa. A clear line is essential, if its a business, treat it like a business.

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Old 13-08-2015, 06:35   #10
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Re: Any Canadians Using Their Boat as a Business?

Thank you very much for your responses and advise. That will get me started.
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