• Charter boat industry

    Boat hire or charter – limits on deductions

    If you enter into an arrangement to hire or lease a boat to others for a fee, deductions you can claim are limited in the following circumstances:

    • you are carrying on a business of boat hire or charter – you must apportion expenses between business and non-business use.
    • you are not carrying on a business, deductions are limited to the amount of income you receive.

    These rules can apply regardless of whether the boat owner directly provides the boat for hire, lease or charter, or whether the arrangement is conducted through an agent, charter operator or other management arrangement.

    Carrying on a business of boat hire or charter

    A business is generally carried out on such a scale and in such a way as to show it is being operated on a commercial basis and in a commercially viable manner. There are several indicators which point to whether you are carrying on a business.

    Apportioning expenses if you are carrying on a business

    Even if your activity amounts to carrying on a boat hire or charter business, you must take private use of the boat into consideration and apportion expenses appropriately.

    Deduction limits if you are not carrying on a business

    If your activity does not constitute carrying on a boat hire or charter business, your deductions will be limited to the amount of income you earn from the activity. Deductions which exceed this amount are quarantined and may be carried forward to future years.

    Find out more

    Taxation Ruling TR 2003/4External Link: Income tax: boat hire arrangements outlines these measures in more detail.

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