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
, 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.
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!
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.