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Tax clarity for boat owners

THE Australian Taxation Office continues to roll-out final determinations, draft determinations, class rulings, product rulings and notices, at the rate of up to, and above, 20 a day.

One group singled out last week, in the form of a draft taxation ruling, was yacht, houseboat and general boat owners.

There are 68,500 recreational boat owners and 900 charter vessels in WA.

Tax Commissioner Michael Carmody said the draft made it clear to boat owners that they could not receive deductions for expenses incurred on the boat unless it was operated as a business.

The draft ruling hopes to explain the confusion that may still exist in relation to sections of the Income Tax Assessment Act, which has been in operation since 1997.

“The draft ruling examines the application of established case law and principles on whether a person is carrying on a business,” Mr Carmody said.

“It concludes that a person who merely provides a boat to a charter operator would not be carrying on a business.”

Mr Carmody warned boat owners in June that the ATO was working on a ruling, after the office had reviewed an arrangement where a person owned one yacht and leased it to a charter company, then claimed to be carrying on a business.

While a ruling was deemed necessary by the ATO, Mr Carmody made it clear already in June that the Tax Act was fairly clear.

“It is important that people carefully examine their situation. Section 26-50 of the Tax Act (and its predecessor) is a blunt instrument,” he said.

Laws stipulating the deducibility of boat expenses have been effective since 1974 after it was introduced into the 1936 act.

Boat owners still confused as to their responsibilities are able to search the ATO website.

The site contains 238 rulings, cases, determinations and advice, many relating to the now-defunct sales tax, for anyone with connections to a boat.

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