Canadian buying a boat in US to travel the world. (tax question)

[epiic]

I am planning to give-up my permanent residency in Canada.

I am buying a boat in the USA and I would like to register the boat in a country that does not charge tax.

What would be the best country to register the boat in?

Also, I am not planning to live in Canada anymore but it would be nice to visit Canada without having to pay taxes on the boat when I arrive.

Any help is greatly appreciated.

[Paul L]

The US is a good place to register if tax is your focus. There is no tax if the boat is not in the country.

[skipmac]

What kind of tax? There are sales taxes, ad valorem taxes, income taxes.

If you buy a boat in the US and register it in the state of Rhode Island there are no sales taxes and no annual ad valorem taxes on the boat. There is a small, registration fee (couple of hundred USD$ more or less).

[SV DestinyAscen]

Someone established an LLC in Montana, purchased a vessel with it and obtained registration, which is permanent. No sales tax.

If you're looking for advanced tax advice to avoid income tax, can't help you there.

[markpierce]

Thanks for leaving the heavy carrying to us.

[Vasco]

Register the boat in Canada. No tax if you don't bring it home for pleasure. You can bring it home for re-fit but no sailing around for fun.

[DavidLGCrawford]

Register it in Canada. If you are giving up your residency then you can visit with your boat without paying taxes and duties.

[epiic]

Originally Posted by Vasco

Register the boat in Canada. No tax if you don't bring it home for pleasure. You can bring it home for re-fit but no sailing around for fun.

Originally Posted by DavidLGCrawford

Register it in Canada. If you are giving up your residency then you can visit with your boat without paying taxes and duties.

This is excellent information.

Where can I locate more details about this?

From what I am told, if I try and sail the boat into Canada, I need to enter customs first and they will want to collect sales tax on the boat.

[DavidLGCrawford]

Originally Posted by epiic

This is excellent information.

Where can I locate more details about this?

From what I am told, if I try and sail the boat into Canada, I need to enter customs first and they will want to collect sales tax on the boat.

After getting partial and differing information from cruisers, I went to the source. I asked CBSA and this is the email I got back:

--------------------------------------- begin ------------------------------------
Every person arriving in Canada has, for border services purposes, a residential status which determines the tariff classification under which any goods being imported by that person must be accounted for at the time of importation. For this purpose travellers fall into two basic groups:

· residents of Canada, or
· non-residents of Canada.

A traveller's residential status for border services purposes is based on where a person lives, that is, where persons make their home and ordinarily reside. In most countries, being a resident requires that a person be a citizen of that country or be permitted by the immigration authorities to live there permanently or for an extended period of time other than vacation or leisure purposes. However, being a citizen of another country or being authorized to live in another country does not, in itself, establish that a person is a resident of that country. The final determination must be based on where persons actually make their home and ordinarily reside.
D2-6-1 Memorandum - Residential Status of Travellers Arriving in Canada

Residents of Canada are defined as persons who, in the settled routine of their life, make their home, reside, and are ordinarily present in Canada. Residents of Canada returning from trips abroad are entitled to the benefits as outlined in Memorandum D2-3-1, Personal Exemptions for Residents Returning to Canada:
D2-3-1 Memorandum - Personal Exemptions for Residents Returning to Canada

Residents who leave Canada to spend the winter months or longer periods of time in a warmer climate are generally not permitted by such countries to remain there on a permanent or indefinite basis. Persons in this category are normally admitted only for a specified period of time solely for vacation or leisure purposes and cannot take up employment in that country. At the end of the specified period, these persons must leave, and usually return to Canada at that time. Such persons (even though in some cases they may be ordinarily present outside Canada) cannot be considered as making their home outside Canada and accordingly, on their return to Canada, can only claim the exemption items outlined in Memorandum D2-3-1.

Further information on the exemptions available to Canadian residents returning to Canada can be found in the I Declare brochure, available on the Canada Border Services Agency (CBSA) Web site at:
ARCHIVED - bsf5056: I Declare
(Please note that although the I Declare publication has been archived, the information is still relevant)

Non-residents are persons who, in the settled routine of their life, make their home, reside, and are ordinarily present in a place outside Canada. Non-residents who arrive in Canada for temporary periods are entitled to the benefits outlined in Memorandum D2-1-1, Temporary Importation of Baggage and Conveyances by Non-residents:
D2-1-1 Memorandum - Temporary Importation of Baggage and Conveyances by Non-residents

Former residents of Canada who are not returning to Canada to resume residence, but who wish to visit Canada with their baggage and foreign automobiles for short visits or on a seasonal basis, may be granted non-resident status and accorded the benefits outlined in Memorandum D2-1-1. Former residents of Canada other than United States (U.S.) citizens who have obtained a permanent visa to reside in the U.S. are issued a U.S. Permanent Resident Card (U.S. CIS Form I-551) by the U.S. Citizenship and Immigration Services.

Additional information for non-residents of Canada can be found on the CBSA Web site at:
Non-Canadians

Should you require additional assistance with your inquiry, we recommend that you contact the Border Information Service (BIS). You can access the BIS line free of charge throughout Canada by calling 1-800-461-9999. If you are calling from outside Canada, you can access the BIS line by calling either 204-983-3500 or 506-636-5064 (long-distance charges will apply). If you call during regular business hours (8:00 a.m. to 4:00 p.m. Monday to Friday, except holidays), you can speak to an officer by pressing “0” at any time after you have made a selection of either English or French.

Thank you for contacting the Canada Border Services Agency.



-----Original Message-----
From: David Crawford [mailto:david@the-crawfords.com]
Sent: July 2, 2016 3:15 PM
To: contact@cbsa.gc.ca
Subject: Question regarding visiting/temporary import of vessel to Canada **16-11884**

Good afternoon,

I am a Canadian citizen, who is now living abroad on my sailboat. It is
valued at greater than $10,000. I have not made any particular country a
residence, but am travelling.

Am I allowed to return to Canada to visit my kids with my sailboat,
without having to pay taxes and import duties. If so, how long can I
stay (or more accurately, how long can the vessel stay) in Canada before
taxes/duties apply.

Thanks
David Crawford

--------------------------------------- -end- ------------------------------------

The two most important parts seem to be:
Residents of Canada are defined as persons who, in the settled routine of their life, make their home, reside, and are ordinarily present in Canada.
Non-residents are persons who, in the settled routine of their life, make their home, reside, and are ordinarily present in a place outside Canada.

If you are a non-resident, you can visit Canada with your "conveyance", ie. your boat, without importing it.

Nowhere does it say you must be a resident of another country to be a non-resident in Canada.

So I am a non-resident in that in the settled routine of my life, I make my home, reside, and am ordinarily present in the Caribbean Sea, and countries therein. I do not maintain an address in Canada. I have any mail sent to one of my kids who forwards it via email.

I recommend you read the links in the above email. If you have more questions you'd probably be better off contacting CBSA directly and asking them. After all, when you are dealing with a CBSA agent at the border, an email from another CBSA agent will carry more weight than "I read on a forum"....

[Ardbeg]

A sailboat can be deemed to be a seasonal residence by CBSA for a person who is a non resident in Canada so the boat has the right to stay in Canada however the person must be out 183+ days to be considered a non resident. Someone else said it, check with CBSA.

[epiic]

Originally Posted by ardbeg

A sailboat can be deemed to be a seasonal residence by CBSA for a person who is a non resident in Canada so the boat has the right to stay in Canada however the person must be out 183+ days to be considered a non resident. Someone else said it, check with CBSA.

183+ days? Yeah, that's not going to work.

The plan is to give-up my Canadian residence, buy a boat next month and sail it back to Canada for a 2 month stay before leaving for good...

[ColdEH]

Originally Posted by epiic

183+ days? Yeah, that's not going to work.

The plan is to give-up my Canadian residence, buy a boat next month and sail it back to Canada for a 2 month stay before leaving for good...

If you bring the boat back to Ontario , you will have to pay the HST on it . No way around that , and they want it within 48 hrs .


Regards

[epiic]

So if I want to register the boat in Canada, I must leave the country for 183+ days before I can bring the boat into Canada without having to pay taxes, correct?

[Restlessone]

Don't forget that if you leave Canada for 183 days you will no longer have access to health coverage.

I was the picture of health until 60 and since than I have had three cancer and one heart operation. Something to think about.

[Vasco]

Originally Posted by epiic

So if I want to register the boat in Canada, I must leave the country for 183+ days before I can bring the boat into Canada without having to pay taxes, correct?

No. Unless you are bringing the boat in for repairs (no using the boat while in Canada) you will have to pay HST. You are assuming you will be a non-resident after 183 days out of the country. This is incorrect. It is not easy to get the CRA to agree that you are a non-resident. The test includes giving up your Canadian credit cards, drivers license and club memberships among other requirements. You cannot deem yourself to be a non-resident.
Determining your residency status

Your best bet to avoid HST is to not bring the boat into Canada.