• GST-free sales and purchases of new recreational boats

    You can sell or purchase a new recreational boat GST-free if it is exported from Australia within 12 months.

    The boat must be:

    See also:

    Definition of new recreational boat

    New recreational boats are newly constructed, and designed and fitted out mainly for private recreational pursuits or hobbies. They:

    • must not be substantially re-constructed
    • cannot have been sold (unless as trading stock), leased or used since they were constructed
    • cannot be second-hand boats or commercial ships (for example a trawler or cargo ship).

    Disqualifying activities

    To be GST-free, new recreational boats you sell or purchase cannot be used for any commercial activity or financial gain by either the purchaser or any other person while the boat is in Australia.

    In addition, to be GST-free a new recreational boat cannot be used for any of the following purposes:

    • as security for the performance of an obligation, other than as security for the loan used to purchase it
    • in carrying on an enterprise in Australia
    • in carrying on an enterprise outside Australia, other than for activities done as a private or recreational pursuit or hobby
    • to obtain any payment, other than      
      • as an employee providing services to an enterprise carried on by the purchaser outside Australia
      • winnings paid from a race or other sporting event in which the purchaser competes.

    12-month export period and other conditions

    For the sale or purchase of a boat to be GST-free, either the supplier or the purchaser must export it from Australia within 12 months from the 'receipt day', unless we allow an extension.

    The receipt day is the earliest day on which one or more of the following events occur:

    • the purchaser takes physical possession of the boat
    • the supplier receives the final instalment, if payment is made in instalments under a contract that requires the boat to be exported
    • the supplier gives an invoice for the final instalment, if payment is made in instalments under a contract that requires the boat to be exported.

    The purchaser can use the boat only for recreational/non-commercial purposes while it is in Australia.

    To be eligible for the extended GST-free period:

    • the supplier must maintain knowledge of both the use and whereabouts of the boat for up to 12 months
    • the purchaser must make sure the supplier is aware of both the use and whereabouts of the boat for up to 12 months
    • the purchaser must provide the supplier with      
      • documentary evidence as proof that the boat has been exported
      • a purchaser declaration as proof of non-commercial use when the boat is exported.

    Documentary evidence of export and usage

    If the supplier exports the boat, they will need to keep a copy of the following:

    • export declaration
    • shipping documents
    • a statement from the purchaser that the boat was used only for recreational/non-commercial purposes while in Australia.

    If the purchaser chooses to either sail the boat out of Australia or arrange for it to be exported on a transport ship, the supplier must be given a copy of:

    • the final Department of Immigration and Border Protection clearance documents, export declaration and shipping documents
    • any shipping documents
    • a statement from the purchaser that the boat was used only for recreational/non-commercial purposes while in Australia.

    Extending the 12-month period

    If neither the supplier nor purchaser can export the boat before the 12-month period expires, both the supplier and the purchaser can jointly apply to us for an extension. However, they need to provide reasons for why they could not export the boat within 12 months and an expected date of export. Reasons could include:

    • unseasonal weather (seasonal weather would not be accepted as the purchaser would need to take that into account when planning to export the boat)
    • unforseen mechanical problems
    • illness.

    If the qualifying conditions are not met

    The sale of the boat becomes taxable if any of the following apply:

    • the supplier or the purchaser fail to export the boat within the 12-month period or such further time as we allow
    • the supplier does not have proof that the boat has been exported within that period
    • the supplier or the purchaser become aware that the boat has been used in a disqualifying activity
    • the supplier does not have proof (such as the purchaser declaration) that the boat has not been used in a disqualifying activity.

    This means the supplier will have to pay GST to us on the sale of the boat, even if GST was not included in the original sale price at the time the boat was sold.

    The terms and conditions of the sale may provide the seller with the opportunity to recover this amount from the purchaser.

    See also:

    • GSTR 2002/6 Goods and services tax: exports of goods, items 1 to 4A of the table in subsection 38-185 (1) of the A New Tax System Act 1999
      Last modified: 22 May 2017QC 24536