The Australian government has agreed to remove the Goods and Services Tax (GST) payable on all boats purchased by overseas buyers, provided the boat is used for recreational purposes in Australian waters for 12 months.
The Goods and Services Tax (GST) in Australia is a Value Added Tax (VAT) on the supply of goods and services in Australia. The GST is levied at a flat rate of 10% on most goods and services. The tax relief proposed will mean a huge saving for overseas buyers purchasing Australian vessels.
Until now, GST was payable on all overseas boat purchases unless the boat was exported within 60 days.
The Australian International Marine Export Group (AIMEX) the main body for the Australian Marine Export Industry has been campaigning for several years to get GST removed on boats sold to overseas buyers who wish to sail in Australian waters.
Assistant Treasurer Hon. Nick Sherry at last night’s budget announcement commented “Buyers will be able to sail new Australian-made boats in our waters for up to 12 months without paying GST on the sale price, resulting in economic benefits for Australia’s coastal regions,”
The Australian marine industry reportedly provides $1.2 billion in export revenue and is a huge employer. Research states that of the 9 companies directly canvassed by AIMEX about the issue, more than $40m in export sales by Australian boatbuilders was lost due to the restriction.
AIMEX CEO MaryAnne Edwards said “It is of great relief that the treasury have recognised the need for this rule change. Once applied, boatbuilders, the industry and nation will reap rewards in return.”
The Chartered Accountants, Federal Budget Report 2010, Section 759 states, the Government has proposed that a supply of a boat used for recreational purposes to be GST-free if the boat is exported by a purchaser (from Australia) within 12 months and only used for recreational purposes whilst in Australia. Mr Sherry said there would be public consultation on the details of the plan before the development of the draft legislation.
The removal of the GST barrier is due to come into effect on July 1, next year, subject to agreement from all states and territories.
When the legislation is passed, it will be possible for Australian boatbuilders and shipyards to advertise boats overseas by saying ‘come to Australia and sail GST free for a year’. There are a lot of overseas buyers who would like to explore Australia in their boat after the purchase and being hit with GST was a real disincentive.
Assistant Treasurer Nick Sherry said the changes would allow boat builders in Australia to ‘overcome disadvantages they face relative to foreign competitors who can more easily sell boats for export tax-free’.
The removal of GST payable will also provide tourism benefits, with boaties travelling around Australia and spending money.
Recognition should be awarded to AIMEX Director Richard Ward, also of Seawind Catamarans for his significant resolve and determination in this issue. Richard has spent significant time driving the changes required on this issue in conjunction with AIMEX and the government.