Canadian and MD Vessel Excise Tax

[Boulter]

Hi:

I am considering purchasing a boat in MD and would like to avoid the 5% vessel excise tax, because frankly I feel that 13% I'll be paying to Ontario is plenty. I realize if I buy and leave within 30 days, I'm golden. However, the current owner of the boat has the slip until April 2013, so it is tempting to go get it next year instead of this fall - saves me paying $2000 to store it in the snow here. Plus it might be fun to sail the Chesapeake a bit before bringing it home, both in the fall and potentially over the Christmas break.

Can I have my cake (leave the boat in MD) and eat it (not pay the tax)?

Regards,

Boulter

[Lake-Effect]

an idea, depending on how much you trust the current owner... pay a large percentage of the purchase price now, the balance just before you're ready to leave MD, and that would be the effective purchase date?

[avb3]

Not sure if it would work, but you can register the boat in Canada without it actually being here. Then, as a Canadian flagged boat, it may not be subject to the tax. The operative word is 'may'.

Once it hits Canadian jurisdiction, it becomes taxable in Canada, but not before.

[brilliantstar]

Have been sailing MD waters for 32 years. MD boat owners are required by law (and face a penalty for failing) to notify the state of the sale of their boat -- to include the name, address, etc of the buyer. MD has pursued use tax evaders out of state and out of country. The former owner will be contacted by the state when he/she fails to renew the registration or the documented yacht sticker. Unless they perjure themselves, you'll get a bill from the "Free State."

[Captivy]

Originally Posted by Boulter

Hi:

I am considering purchasing a boat in MD and would like to avoid the 5% vessel excise tax, because frankly I feel that 13% I'll be paying to Ontario is plenty. I realize if I buy and leave within 30 days, I'm golden. However, the current owner of the boat has the slip until April 2013, so it is tempting to go get it next year instead of this fall - saves me paying $2000 to store it in the snow here. Plus it might be fun to sail the Chesapeake a bit before bringing it home, both in the fall and potentially over the Christmas break.

Can I have my cake (leave the boat in MD) and eat it (not pay the tax)?

Regards,

Boulter

Check out registering the boat in the federal registry, I know if you purchase a Canadian registered vessel, there are no sales taxes, as you've purchased the shares in what amounts to a corporation. Costs a few hundred bucks but if you go to sell the boat, no tax! 13% more in your pocket.

[bgallinger]

I know ontario is deperate for money but why not just register the boat in MD?

[SVTatia]

I bought a boat in NY and trucked it to Canada. I paid the Canadian taxes since I had to hire a customs broker and you cannot avoid these, if you sail in, you pay the taxes when you register the vessel - either way they will get you.
For Maryland, if you can prove that you will not be using their waters ("principally used in Maryland") you may be able to get an exemption from the 5% excise tax, but to buy now and wait until next spring you will not be able to take advantage of this. As posted before, if you trust the seller and postpone the effective purchase date...

[Boulter]

Hi:

Thanks for the comments.

I guess my choices are to pay MD, pay haul and storage in Ontario this fall, or somehow put off closing until say March next year.

Boulter

[MARC D]

Boulter,
I am Canadian and bought a boat in MD in 2011. You will hear many different stories about tax rules but what I have seen is that as soon as you buy and register the boat with a Canadian port, you put a Canadian flag on it and won't be bother if you don't spend more than 180 days in MD. Just go to Baltimore, ask for a cruising licence (good for 12 months). When you are ready to bring the boat in Canada you will have to pay the import tax. You don't have to pay any Canadian taxes as long as the boat is outside Canada.

[ColdEH]

Import taxes are basically the "HST" and they only have to paid if you bring the boat home to Canada. I think you have 48 hrs to submit them or face a fine . Or something like that .
Regards

[Jd1]

Originally Posted by typhoon

Import taxes are basically the "HST"

Don't forget about duty on any non nafta boat .... 9.9% if I recall correctly.
You probably have to pay HST on the duty as well .... don't know for sure but wouldn't surprise me.