We did this and our boat is Canadian registered, but the boat has remained out of the country and as such, Canadian taxes have not been due. Below is our experience and what I found when we were shopping
, plus a couple additional thoughts for consideration.
1. Buying a used boat and flagging it Canadian. Does one pay duty on a used boat?
- I think you answered this yourself already.....yes.
2. If the boat remains out of Canada, I assume taxes are deferred until the boat returns to Canadian shores. Is there a grace period, or are taxes due immediately upon return?
- Correct, taxes are deferred until the boat returns. No grace period as far as I understand. Federal taxes and duty (if applicable) are due on return. We're Alberta residents, so no PST would currently be due for us, but I think you'll find that the province will want their money
soon also after your return. You'll also likely find that the province of the port on the registry will likely send a bill for PST (based on their estimated value of the boat) within a year of it going on the registry. BC did this to us, as our port of registry is Vancouver. I finally had to send them a a formal letter of declaration, plus documentation
showing that the boat had been purchased outside of Canada, and had not returned since purchase
. I love that tax departments are allowed to operate under a 'guilty until proven innocent' methodology. The burden was on me to 'prove' this before they finally agreed I didn't owe PST.
- There is a mechanism to bring a boat into Canada 'under bond' to have work performed on it, then take it back out after the work is completed, but when I talked to Customs
in 2011, they indicated the scope
and duration of these has been tightened from past practices due to what they perceived as abuse.
3. A flag of convenience. Say we registered the boat in the Cayman's, are there any implications when returning to Canada... or in other waters for that matter?
- We ended up in the same spot as you that there was no real benefit. However, we know a few Canadians that have their boats registered in the BVI's and have had no issues when cruising. As you found though, taxes would be due upon return.
There are a couple other issues to consider when buying out of country though:
- Admeasuring. Depending on tonnage (and length?) the boat may need to be 'admeasured' (tonnage, draft
, beam, etc) by an approved Canadian surveyor
. There are only a couple in Florida
and the Caribbean
, so you'll need to fly one in to measure the boat potentially if you buy one in the Caribbean. There are a few scattered up and down the east and west coasts also from memory. Not sure about Europe
and elsewhere, but clearly people get it done. You'll need to research
the requirements since I can't recall
what the size triggers were, but all the boats we looked at triggered it (~45'+ and >18 tonnes gross). Frankly it strikes me as an archaic requirement as they won't accept engineering drawings for production boats, it needs to be measured.
- Tax requirements where you buy. Some of the Caribbean countries (ie. St Lucia) want to assess taxes if the transaction occurs there. This can be avoided by executing the transaction 'offshore', and is easily dine, but you need to be mindful. Additionally, if you buy a boat in the US, quite a number of states assess state tax if the boat remains longer than a specified period. For example, I believe Washington
give you six months, then state tax is due.
- Finally....are you really sure you'll bring a 40-50' cat back to Canada after 5-6 yrs of cruising. I love sailing at home, but it's cold back there ;-)
Just our experience and thoughts. YMMV.
Best of luck,
Amel Super Maramu
Currently cruising South Pacific
with our 2 kids
(13 & 15)