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Tax traps for boat owners

With the current economic uncertainty and the high price of fuel, many boat owners may consider hiring or chartering out their boats for part of the year as a way to reduce the costs of what can be an expensive recreational activity.

However, while creating a sideline business and claiming tax deductions for boat expenses is attractive, owners won’t be able to claim deductions if they fail to qualify as a bona fide business under the Australian Taxation Office (ATO) rules governing boat charter.

In order to claim deductions for boat expenses, you need to tick all the boxes required by the ATO. The tax office has well-defined rules for determining whether or not a boat owner is carrying on a bona fide business. These include the prospect for profit, the availability of the boat for hire, and repetition and regularity of conduct.

If you need further information, please contact our office.

Posted on 3 August '12 by , under Business.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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