• Deduction limits if you are not carrying on a business

    You are allowed to claim deductions even if you cannot demonstrate you are mainly carrying on a specific marine business through your boating activities.

    Your deductions will be limited to the amount of income you earn from the boating activity in the income year.

    Any deductions and/or losses in excess of your boating activity income are quarantined and can be claimed against boating income derived in future years.

    If you hold and operate more than one boat that is subject to the quarantining rules, you can claim the total deductions relating to all the boats up to the amount of the total income from all the boats. That is, you can offset deductions relating to one boat against income from another boat.

    Quarantining rules

    All amounts relating to you using or holding a boat that you could otherwise deduct may be quarantined. These amounts include interest on boat loan, depreciation, maintenance, crew wages, fuel, boat registration and insurance, and berthing fees expended by a boat owner.

    Amounts expended by other people (third parties) for advertising signage, such as displaying their business logo on the hull or sails, is not affected by the quarantine rules. Amounts expended by you to secure the advertising contract are subject to quarantining.

    Amounts are not quarantined where such amounts are incurred in providing fringe benefits.

    The quarantined amount to be carried forward is first reduced for boat owners who:

    • have boat capital gains
    • have boat business profits
    • derive net exempt income that is not applied against deferred non-commercial losses.

    Quarantined amounts are non-deductible if you become bankrupt in the income year.

    Excess boating deductions for the current year are added to your reduced quarantined amount carried forward from the previous year.

    If the reduced quarantined amount carried forward from the previous year is less than your current year boating net income, you can claim the full amount in the current year. If it exceeds your current year boating income, the excess is quarantined for a further year.

    Find out more

    For more detail about these boat measures, refer to:

    On non-commercial losses, refer to:

    For information on exiting the industry if you sell your boat or take it into private use, refer to:

    End of find out more
      Last modified: 14 Sep 2016QC 17113