Importing a Yacht from US to Australia

[Marc1]

Lots of interesting post.
Allow me to add my 2 cents.

It seems to be rather clear for all, that if you can produce a certificate of origin or rather a “Facts of Build”, a document that may only be issued by the manufacturer of a vessel, you can avoid the 5% if manufactured in the US. It does not have to be 100% built there by the way. So that takes care of the 5%.

I notice that most people focus on the 10% GST and how it is calculated and therefore how to avoid it.
GST (goods and service tax) is what the English call Value Added Tax, or a tax on profit. Every consumer good or service must pay 10% of its final cost all included. Customs must calculate on behalf of the Australian Tax Department the total cost of a vessel imported. Cost includes the purchase, and all other expenses. The cost of transport must reflect the commercial value of transporting a vessel from A to B. If you pull the boat by swimming in front of it pulling from a rope with your teeth at zero cost, customs will consider the commercial cost of transport and disregard your real cost. Sometimes they are happy to consider all your expenses including fuel, meals, marina charges and crew salaries for example if it adds to a reasonable sum. If transporting a vessel from Everglades to Sydney costs 48,000 and you say you spent $3000 in doing the trip with the wind in your sails, I am sure Customs will want to consider a higher cost in order to charge GST at a commercial viable rate or be accused by the ATO of bias.

As much as the above may anger you with good reason, it is not unique to Customs. If you decide to build an extension yourself on your own house and quote the council the cost of materials as your total cost, the council will add to that what they consider a reasonable cost for a builder to do it in order to apply the cost of the permits that are a percentage of the total cost.

Having said all of that, I think that the focus when importing a boat from the US is not GST but the overall cost charged by the shipping company and all the hidden costs that your fright forwarder can not quote with precision.

I also find frustrating the abysmal difference in price between our two countries, however when you add the real value of transport by a shipping company, anything between 40k and 70k things start leveling out.

So it seems that unless you want to take a big risk for little gain (or little loss), the only attraction for this exercise is if you do it yourself, that is, if you sail from the US to here island hopping, first stop Hawaii.

That brings us back to the GST and the flag topic.

In Australia you can legally register an ABN (Australian Business Number) if you reside legally here, and register for GST and so you are now ready for business.
You get invoiced for mowing the lawn on your investment property plus GST, you claim it back in the same quarter on your BAS (business activity statement) you fill in yourself in 5 minutes every 3 month. You invoice someone for giving them a foot massage, plus gst. You pass that money on to the taxman. Easy.
Now you buy a sailing boat in the US, sail it here. Customs will do their calculations on behalf of the taxman and tell you you must pay 20k for the boat+30k to bring it here= 50k ergo... GST 5k. No big deal. Write it down on your next BAS and the money is in the bank the next week. YOU GET IT BACK!

HOWEVER.

When you sell the boat remember you must include 10% in your final price and pass that back to Mr taxman. If you don't you are in serious trouble.
Now here is when it gets interesting.
Had you had your way and pay GST only on 20k + 3k = $2,300 GST This is what happens:
You now sell your boat for 70,000 you must pay the taxman 7,000 in GST. Total tax on profit you must write off is 7,000 - 2300 = $4,700 of real tax to you.
Yet the (bad) Customs said your real transport value was 30,000 so your cost was 50,000 and now that you sell for 70,000 your tax on your profit is only $2,000.
It is not that bad you must admit.

Finally the topic of the flag on the ship. All the comments about registering a boat in Australia (at a pittance cost) I think make a mountain out of a molehill. It is more a matter of logistics or hiring a good agent for the paperwork.
Yet it occurred to me that they may be an alternative. Not that I have tested it, just an idea.

What if you pay your supplier in the states with a letter of credit, a document that guarantees the vendor payment by a bank if he complies with the letter of the agreement. The agreement is that you charter his vessel to sail to Australia.
It is still his boat and under American flag. You are just renting it. When in Sydney, you decide to buy it since you like it so much and so you go to the bank from which you purchased the letter of credit from, and tell them that all is good and that they can release the funds and your vendor gets paid. Then and only then the boat is yours and you can transfer ownership to yourself with no risk nor funny business. Come to think of it, Customs will be unable to add any transport cost to your boat since the owner sold it to you in Australia. Not that it matters really after the reasoning above.

Kind Regards
Marc

[bruce in oz]

i've just been through this exercise, in addition to costs already mentioned in other posts there are AQIS (australian quarantine inspection services) fees and the cost of fumigation of all timber components. my timber yacht would have to be totally enveloped then treated with chemicals that pretty much destroy all rubber gaskets seals etc. i could expect to sleep on the ground for a few nights.

the alternative was to get a Termi Track inspection (microwave wand) of the entire yacht, by a qualified pest control agent under aqis supervision and with an aqis entymologist both of which cost me $320/hour (for the pair). i had to remove everything inside to give un-hindered access to drawers, lockers, bilge, hull etc. Thankfully the test proved that i didnt have termites and could forego the fumigation, but there was little change from $1k

the pest control quotes for termi track varied by 800% so definitely shop around.

cheers

[Nauticatarcher]

Originally Posted by MitchM

just a note that when sailing to AUS you must contact AUS customs and immigration by mail or email (within ?48 hrs of anticipated arrival...) to announce your impending arrival. you can't just call them to announce by VHF or cel phone . there is a hefty fine for failure to comply . stories abound on the internet quoting a $15,000 AUS fine for violating this rule....(don't know if they are true...)

PS- don't ask me what you are supposed to do if you are on an oldfashioned yacht without e mail or post capability-- ask them !!!!

Reporting time before arriving in Australia is 96!!! hrs

[bruce in oz]

information for yachts travelling to australia - let us know you're coming

The Master of a vessel arriving in Australia is required by law to give notice of impending arrival not later than 96 hours before arrival. Penalties may apply for failure to do so.
If the journey, from a place outside Australia, is likely to take less than ninety-six (96) hours then the below sliding scale is used based on the steaming time from the previous foreign port (section 64(5)(b)(i) of the Customs Act- Customs Regulations section 27).


and on it goes....


which basically means that anyone coming to aust would be a fool not to look at that website and give the buggers as much notice as possible, too much notice doesnt seem to be illegal. so if you are leaving apia or noumea, wellington or wherever heading to oz send them an email beforehand.


i didnt know about any bloody rules, got here went through the hoops, got a letter from them (no truth be known the letter actually came from aqis) telling me not to be a naughty boy ever again.


the aqis inspector did however say, during the inspection, that had i not had an aust passport i would in all likelihood find myself in gaol.


in retrospect customs were charming & free, aqis was rigid and costly.
both inspectors were female, (the aqis inspector had done a circumnavigation) gee i hadnt seen/spoken to a female for weeks, if you arent doing anything dodgey customs are ok and unlike samoa or indonesia they arent looking for a bribe, a tip or a cup of tea, they are simply doing their job.



cheers
bruce

[Marc1]

They are simply doing their job.
True. And I rather deal with Australian burocrat than Italians, South Americans, PNG or God forbid Indonesians.

Having said that, in the business of importing a boat as an owner as opposed to as a commercial importer, you can not go past certain attitude that seems to be in built in our culture and that transpires onto rules regulations and legislation.

If I buy a boat and own it and sail here or get it transported here for my own use, I am a bastard. That's it. That very much sums it up.

As a bastard I must be punished and cost real or imaginary must be created an piled up on my import bill. The punishment is GST and all that quarantine can throw at me. As you know profit is a sin, making money is evil and losing money is its redemption. Burocrats in Australia will make sure you go to heaven. That sort of sums up the local credo.

However...
If a commercial importer would, rather than pay the shipping company their extraordinarily high bills, hire in stead a couple of specialised crew who do the trip for a salary, Customs will be unable to "create" any imaginary cost, since it would be in conflict with tax law. Basically if a product, in this case a vessel must pay GST it does so on the total cost of the product and transport. Total cost must be on paper complete with invoices. If the real cost including the contracting of a crew to sail it here is say $20,000 yet Customs considers that to be too low and decides that real cost must be $50,000 in order to charge higher GST, this should be able to be used at tax time for the company to claim costs, yet there is no invoice for this imaginary additional $30,000 artificially created by customs and is therefore illegal.

I have yet to test this but clearly there can not be two separate law, one for the evil rich individual who dares to buy himself this evil toy, and a different law for the corporations who we suck up to in order to keep our jobs.

[nonam]

Seems to me this transportation tax is a killer.($20k for a bargain boat but $30k to ship it?)The law seems wrong because you can legally have your boat moved by hiring a delivery skipper.And if you wish to go uninsured you can hire a singlehander.(uh....now you are going to tell me insurance costs are mandatory?).
And if its a US boat you must pay shipping from a US port no matter where you actually bought ?
And the value of the boat?How do you prove what you payed if you deal direct with a private seller?If you get the deal of the year,will customs accept it?
All these questions..........
And such a shame the oz dollar dived from 90cents.......

[Marc1]

Shipping something that dos not fit in a container is a one off job and the cost variations are ludicrous. I had quotes for the same vessel vary from 40 to 70k and quotes from trucking companies in the US vary from 3k to 8k. Costs for moving containers is pretty much standard. The perils of the amateur one off buyer who must buy ex works in the US and export and import are a lot, a true mine field and agents usually profit from it rather than help. Your costs must be proven to Customs yet they have the right to say that if you bought the ship for a pittance it is not commercial value and they will set the value. Yet just like the case of inflated costs for GST, this ficticious cost will hit the fan if you are a bsuiness and tell the ATO your invoice says $15,000 yet Mrs Customs decided it cost you $30,000 so there! They have done you a favour by infalting your cost for a fee of 10% . I would love to see the ATO and customs at that one.

The tax monologue I engaged on this thread is only to expose a few flaws in our tax system, and some smug yet standard attitude you will expect from local burocrats and to show that it is really not that difficult to overcome.

As for thumbing your nose at the shipping company and sail your own to OZ or hire someone to do it for you, that is uncharted territory yet not new. It was easy after WW2 to find "suicide crew" who would take European flat bottom recreational bay boats, fit extra fuel tanks and take them across the Atlantic to America and even South America for a fee.

Dollar gone down, you are right, it will stay arount 65 cents for a while, its time to export. Do you guys like our wine?

[nonam]

Marc1 there is a lot of stuff in your posts and I am not the brightest light in the harbor.But I love fighting the tax collectors.(I dont have delux medical insurance or luxury superannuation,why should I pay for theirs?)I actually won a fight against California DMV one time,but thats another story.
So we have a US hull $20k bargain and $40k shipping and pay $6k GST.Then some fool buys our bargain boat for $70k so we must pay another $7k GST?We are a foreign citizen or a private Australian citizen with no other employment or business activity.So there is no way to claim back GST?We are screwed?

[Marc1]

Originally Posted by nonam

Marc1 there is a lot of stuff in your posts and I am not the brightest light in the harbor.But I love fighting the tax collectors.(I dont have delux medical insurance or luxury superannuation,why should I pay for theirs?)I actually won a fight against California DMV one time,but thats another story.
So we have a US hull $20k bargain and $40k shipping and pay $6k GST.Then some fool buys our bargain boat for $70k so we must pay another $7k GST?We are a foreign citizen or a private Australian citizen with no other employment or business activity.So there is no way to claim back GST?We are screwed?

Hum...not exactly.
However yours is not a question. Tell me the scenario and I may give you a ball park answer. Who owns the boat, who buys the boat, where is the buyer where is the seller (legal residence), who pais for shipping, when is the transaction to take place that is before or after the purchase ... mm that is just to get started.

[nonam]

Originally Posted by Marc1

Hum...not exactly.
However yours is not a question. Tell me the scenario and I may give you a ball park answer. Who owns the boat, who buys the boat, where is the buyer where is the seller (legal residence), who pais for shipping, when is the transaction to take place that is before or after the purchase ... mm that is just to get started.

Ok,I am NZ citizen but I have no address there.I am resident where ever I am,preferably on a boat.I buy a Columbia 36 in the US for $15k.Its old but in nice condition with Yanmar,monitor and some other stuff.I sail it to Oz and tell customs I want to sell it.Give me your best guess what happens.

[Nauticatarcher]

When you buy boat in US you will have to Register it in NZ, to do this you will have to presenr the bill of Sale you got from seller when purchasing to prove ownership this will have price paid on it, when you arrive in OZ as a NZ registered vessel you will get a cruising permit for 1 yr, this can be extended for up to two years and can be spread over multiple entries up to three years, if you wish to sell vessel you will have to pay GST and possibly duty if you cant prove vessel was substantially built in US, this will be assesed on Bill of Sale price, unless it isover 12 months old in which case vessel will be valued for duty purposes, this is not necessarily as bad as it may seem. Some american friends of ours have recently imported therev boat and when Customs appointed valuer came on board he asked them how they would like it valued, when asked for clarification he said "there are maany ways to value a boat eg; insurance value, market value, fire sale value", naturally they went for Fire Sale value and duty was paid accordingly, as the boat is now legally in OZ all duties paid they are free to do as they wish with her and one year later it si on the market for considerably more than fire Sale value

[Factor]

[quote=bruce in oz;225807]

which basically means that anyone coming to aust would be a fool not to look at that website and give the buggers as much notice as possible, too much notice doesnt seem to be illegal. so if you are leaving apia or noumea, wellington or wherever heading to oz send them an email beforehand.

Absaolutely - the legislation prescribes a minimum prior period, there is no maximum.

the aqis inspector did however say, during the inspection, that had i not had an aust passport i would in all likelihood find myself in gaol.

Last time I checked, neither AQIS nor ACS had the power to imprison, even under current regimes, we still reserve that power for the courts.

Originally Posted by Marc1

If I buy a boat and own it and sail here or get it transported here for my own use, I am a bastard. That's it. That very much sums it up.

Yep - seems that way, more to the point you are inconvenient, ACS (despite what the TV shows say) is not a border protection agnecy - its a revenue agency. Second largest in the country.

[Marc1]

Originally Posted by nonam

Ok,I am NZ citizen but I have no address there.I am resident where ever I am,preferably on a boat.I buy a Columbia 36 in the US for $15k.Its old but in nice condition with Yanmar,monitor and some other stuff.I sail it to Oz and tell customs I want to sell it.Give me your best guess what happens.

Let me first say this: If anyone takes tax advise from the internet and from all the people from me, then you need your head examined. If you base your business decisions on something someone said to you on a bulletin board like myself, you must be kidding.

Ok got that disclaimer out of the way.

GST is a complex issue. So expert and paid (read expert and not free) advise is paramount.
Importing also requires paid advise.

GST must be paid if the goods or service is to be consumed received or "enjoied" in Australia. So if you are a resident of Australia and import a boat for your own use, you obviously must pay GST on the "customs value" of the boat.
However if you are not a resident of Australia, and the boat you sailed here is your own boat with foreign flag for you to use and then sail back to NZ, you don't have to pay any tax, you may be subject to other charges and restrictions but not GST since there is no sale.
If you want to sell whilst in OZ, you them must enter the boat legally in OZ first, so turn into an importer. So duty and GST on customs value have to be paid. Of course the circus does not end there, in fact it only starts because you will have to get your boat checked by AQUIS. Good luck with that, I just paid $2500 to their contractors to clean two little machines from a bit of dirt. There was a bus in the washing bay that got slugged with $4000 for "cleaning". Incidentally in my very detailed invoice there were 3 hours ($270) to "assess" how dirty it was. A boat can be anything at all.

So.

I would try to find a buyer in OZ, contact an agent to do all the dance for the buyer and sell to him ex works on the wharf

[bruce in oz]

[quote=Marc1;227429t
..snip
Incidentally in my very detailed invoice there were 3 hours ($270) to "assess" how dirty it was. A boat can be anything at all.
[/quote]
up here (darwin) neither aqis or customs really had a clue about what the procedure was and being fair they both said 'we probably import one or two yachts a year' i just happened to be one and my friend with the cat from usa happened to be two we were going through the same process at the same time, although he had only just arrived from usa and i had been on a cruising permit for several years. i managed to enlighten customs about a couple of things the major one being that whilst they said i could do it myself they didnt know much about that process either. when i started to delve into it i discovered that doing it myself was going to cost $250 for the electronic certificates to make a government payment, required id and trips to a post office to get it and generally could be expected to take a couple of weeks, this was after downloading an 80mb zip over my mobile phone internet connection. the commercial import agents wanted $245 up to $600 to do the same thing. (on that i recommend dhl) mind you all this was after paying about $400 to get a current valuation. at the end of the day its all been paid and my yacht is now legal in australia.

hmm have i said i was really pis se doff about paying aqis $320 an hour for the inspector and the entymologist during the termi track inspection, the blasted inspector was standing around on the hard having a bloody cigarette and talking to my friend about what he had to do, checking out his boat and charged me for it. this was on their third visit because they failed to tell me previously what needed to be done and who was doing what.

i kept on thinking to myself i shouldnt have to pay all this crap to simply mind my own business and live in my only home.

dinkum it could be a nightmare if you really want to do what you are thinking about get an agent or do as my friend did, get the major repairs he needed done and then shoot thru to bali and then further north for the fitout before it became an issue for him.

[hoppy]

Originally Posted by MarkJ

$40k florida to aus by ship. 15% gst and duty (incl the 40k in that). $800 registration, plus 10 to 20K incidentals.

Just doing a quick claculation.. 10k incidentals is too lite...

Mark

Sorry for resurrecting and old thread but I am a little shocked by how much the shipping is. I guess Europe is even more expensive. I guess I will want to get in a few years of sailing in Europe before I ship any boat I may want to buy back to Australia.

The gov and their attitude to import taxes is quite frankly a pain. I do wonder how many Aussie ex-pats like me are put off returning because the gov wants you to jump through hoops and empty you pockets when you want to return.

I imported into the UK my 6 month old motorcycle when I moved from Aus and never paid anything more than the standard registration fees and stuff and had minimal paperwork to sign. I looked at buying a car to eventually take back to Aus but after reading what you have to do was put off.

At the moment buying a yacht to take home still feels worth it, but that may change... Then again since I have been over here (11 years) I have bought several things thinking "I'll take them home" and eventually sold or upgraded them as I was still here. Maybe the boat I may buy might get sold and replaced before I ever leave