From 1 July 2007, the measure allows deductions for boat owners who derive income from their boats, even though they are not mainly carrying on a specified type of boating business.
How do the new measures apply to you?
You are allowed to claim deductions to the extent of the income generated from boating activities, even if you cannot demonstrate you are mainly carrying on a specific marine business through your boating activities.
If you are not carrying on a specified type of boating business, your deductions and/or losses in excess of your boating activity income will be quarantined against boating income to be derived in a future year.
What is the relevant provision in the tax law?
The income tax consequences of boating activities are now considered in section 26-47 of the Income Tax Assessment Act 1997 (ITAA 1997). All boating activities are affected, specifically when the activity incurs a loss for income tax purposes or redeems quarantined boat losses.
Taxation Ruling TR 2003/4 Income tax: boat hire arrangements has been updated to include an addendum, reflecting legislative amendments and their application.
What is the difference between the old law and the new law?
Under the old law (applying to all deductions claimed up to and including 30 June 2007) if the boat is not mainly used in a specific type of marine business, income is assessable but all deductions and losses are disallowed.
Old law and new law:
Before 1 July 2007
(section 26-50 ITAA 1997)
|
From 1 July 2007
(section 26-47 ITAA 1997)
|
All income derived from boating activities is assessable.
|
All income derived from boating activities is assessable.
|
Deductions from non-business boating activities are not allowable.
|
Deductions from non-business boating activities are allowable up to the level of income generated from the boating activity in the income year.
|
Losses from non-business boating activities cannot be utilised in the current year or future years.
|
Excess deductions and losses from non-business boating activities are quarantined and can be claimed against boating income derived in future years.
|
Last Modified: Tuesday, 6 September 2011