How To Save on Boat-Related Tax and Marine Expenses
Thinking of buying a boat for your business? Like every business, you want to spend less and get more benefits. It can be done - and you can even save on tax and finance your accessories such as your trailer, safety gear, insurance and so much more.
If you're using a boat for business 50% of the time or more, you can apply for commercial loan products - the most common of which are chattel mortgages and hire purchases.
To help you navigate the commercial boat market in 2016, we’ve spoken to Bill Tsouvalas, from Savvy Boat Loans, recognised by BRW as one of the fastest growing car finance companies in Australia in 2015 and have come up with tips on how to save on tax and more on buying your next boat.
Commercial boat loans explained
Chattel mortgages and hire purchases are quite similar. Chattel mortgage is a loan that puts a mortgage on "chattel" - the asset you intend to purchase. Once you pay off the loan, the mortgage is lifted. A hire purchase works in a similar way, though you only gain ownership of the boat after you've paid off the loan. These products may work better for your business depending on your accountant or financial professional's advice. But how does your business benefit?
It's all about keeping cash flowing
Commercial boat loans can help your business retain its cash flow. Repayments can be fixed each month (or fortnight, or week depending on your preference) so you know how much you'll be paying and work around it. You can also incorporate a balloon payment (a residual value payment) to offset the regular repayments for a lump sum payable at the end of the loan.
Depending on how you negotiate the loan package, you can even tailor repayments around seasonal business. If you're a tour operator and only have customers during summer or winter (for those in the whale watching business!) your bank or lender can find a great boat loan solution that satisfies all parties.
Borrowing more than 100% of value - it can be done
You also keep cash flowing because business can also make a revenue neutral purchase. You can finance 100% of your boat and even an amount exceeding your boat's value. That means you can finance insurance, safety gear, your trailer, berthing fees, registration and public liability.
Tax breaks a plenty
Your accountant might groan, but you'll grin knowing you can claim your GST on the purchase price on your next BAS with a commercial boat loan. You can also get back your interest payments and depreciation up to the depreciation limit.
Save money, go with commercial boat loans
Buying your next boat with a chattel mortgage will save your business money with keeping your cash flow intact, financing extras like your insurance and accessories and claim a variety of tax benefits. So get on the water quicker, without the added expense!