Charter boat industry

The following information provides details on our position regarding boat owners who enter into arrangements to provide a boat to a charter operator, or another party, for the charter operator to hire, lease or charter to others.

Taxation Ruling TR 2003/4 Income tax: boat hire arrangements
This ruling considers the operation of sections 26-50 and 40-25 of the Income Tax Assessment Act 1997 (ITAA 1997), which prevent expenses incurred in respect of a boat used for hire from being deductible unless this activity amounts to the carrying on of a business.

Boat hire arrangements: What tests apply to determine whether activity amounts to the carrying on of a business
A boat hire activity must amount to the carrying on of a business to claim any deductions for that boat.

Boat hire arrangements: No deductions where activity is only a lease
A boat hire activity must amount to the carrying on of a business to claim any deductions for that boat.

Boat hire arrangements: Income tax deductions
A boat hire activity must amount to the carrying on of a business to claim any deductions for that boat. Deductions are not allowed where the activity is only a passive receipt of income from property.

For more information on non-commercial losses, refer to: Non-commercial losses - home Guide to non-commercial losses. For information on exiting the industry if you sell your boat or take it into private use, refer to: GST and the disposal of capital assets (NAT 7682) Goods and Services Tax Ruling GSTR 2000/24: Goods and services tax: Division 129 - making adjustments for changes in extent of creditable purpose and Addendum.