The Boat Charter Overview
The May 2006 Budget Press Release and subsequent changes to Legislation (effective July 1st 2007) have heralded a new era of fair tax treatment and certainty for charter boat owners.
The press release contained within the May 2006 Budget (see link below) heralded the commencement of a fair tax treatment for Charter boat owners by setting a minimum base level of tax deductibility whilst still maintaining the opportunity of total deductibity for owners who are able to fully satisfy the business test as set down in the Charter Boat Ruling issued in May 2003 - TR 2003/04 Income Tax “Boat Hire Arrangements”.
This press release and subsequent legislative changes (effective July 1st 2007) introduced a 2nd tier or base level of deductibility which allow owners to claim annual charter boat expenses to level of their annual charter boat income, with any surplus expenses quarantined and carried forward to be offset against any future income from the charter boat business.
Having established this minimum level of deductibility, full deductibility is still available where businesses fully satisfy the business tests as set out in TR 2003/04, allowing annual charter boat expenses which exceed the annual charter boat income to be offset against other applicable, assessable income within that year.
The statements contained within this website are not to be construed as formal tax advice and potential Charter Boat Owners should seek qualified, independent and expert advice in this area.
For further information go to the ATO web site and simply type in “boat hire arrangements” as a key word search.
PRESS RELEASE FROM THE HON PETER DUTTON – MINISTER FOR REVENUE AND THE ASSISTANT TREASURER.
Charter boat business model
As a part of the process for Potential Charter Boat Owners to assess where their proposed charter boat business would sit in relation to the above circumstances ie complying to the minimum base level of tax deductibility or able to fully satisfy the business test as set down in the Ruling TR 2003/04 Income Tax “Boat Hire Arrangements”, the potential business needs to be viewed as a Financial Model.
To assist in this, in 2003, Finlease created and provided a series of linked spreadsheets (CHARTER BOAT BUSINESS MODEL) to the Charter Boat Industry Survival Campaign (CBISC). This basic series of linked excel spreadsheets (which have recently been updated) may greatly assist Potential Charter Boat Owners in modeling the structure and outcomes of their future income and expense projections as a part of their overall business models.
These spreadsheets (CHARTER BOAT BUSINESS MODEL) provide a template to test the feasibility of a prospective charter business. Potential Owners simply insert the criteria of their expected circumstances into a general spreadsheet and view the results. These spreadsheets allow for a wide range of scenarios including % financed, gross & net income levels, private use etc to be tested.
Availability of The Charter Boat Business Model
If you would like to obtain an interactive version of the CHARTER BOAT BUSINESS MODEL as well as further background on the recent Legislative changes, simply email your request to mark@finlease.com.au or phone Mark O’Donoghue on 02 9959 3122.
Disclaimer - The spreadsheet templates have been produced on a best-endeavours basis by Finlease for CBISC and Potential Charter Boat owners as an aid to the industry. No warranty, guarantee or assurance is implied or given by Finlease, CBISC, its committee, personnel or professional partners on these spreadsheets.
Potential Charter Boat Owners should seek qualified, independent and expert advice prior to commencing a Charter Boat Business