Tips on handling customs duties and VAT/GST taxes

Customs duties and VAT/GST taxes can come to significant numbers and it can add up to real money. Many countries, including Australia have mechanisms for “Boats in Transit” to avoid or recoup those taxes, but just try to actually make it happen! Australian GST is 11%. In theory it is refundable when you leave, but the rules make it essentially impossible. First you have to sign into a “scheme” (yes, that’s what they call it) which, besides paperwork, requires you to pay $38 for each crew member. That $190 for us would mean that we would have to have spent more than $1727. But just on goods, not services. Goods and services mixed in a bill? Sorry, not deductible. Then if it is just goods, you must be able to prove it is being exported. Paint, painted on already? Sorry, can’t tell. Rope made up into halyards? Sorry. Did you know it also has to be exported within 30 days of purchase? Sorry. And you don’t get 100% of what you spent due to unspecified charges. I talked to three Customs officers and a “question line” at the Capitol, and got the impression that it had never actually happened.

Location: 42° 04S, 150° 46E
Tuesday 12:00, 05.01.2007

On the First of May, the Schooner Maggie B was at 42° 04S, 150° 46E. We were motor sailing at 7.2 knots northeast for a recommended turn point for weather, at 41deg30S/152E, where we will head for Cape Farewell at the northern tip of the southern island of New Zealand. We should hit the turn point at about midnight tonight. The wind has been essentially non-existent since we left Hobart, but there is a long Easterly swell reminding us that there is some weather out there.
We have traveled 158 NM since Hobart and Nelson, NZ is 1031 NM away. We should arrive Nelson on May 7th.

Things are quiet on board with everyone finding or remembering the pacing of a Blue Water Passage. Crew aboard is Bori Kiss, Hannah Joudrey, Theresa Chapman, Owen Baker and Frank Blair. Theresa has her short bio up on the web site.

We’re still learning. Customs duties and VAT/GST taxes can come to significant numbers and it can add up to real money. Many countries, including Australia have mechanisms for “Boats in Transit” to avoid or recoup those taxes, but just try to actually make it happen! Australian GST is 11%. In theory it is refundable when you leave, but the rules make it essentially impossible. First you have to sign into a “scheme” (yes, that’s what they call it) which, besides paperwork, requires you to pay $38 for each crew member. That $190 for us would mean that we would have to have spent more than $1727. But just on goods, not services. Goods and services mixed in a bill? Sorry, not deductible. Then if it is just goods, you must be able to prove it is being exported. Paint, painted on already? Sorry, can’t tell. Rope made up into halyards? Sorry. Did you know it also has to be exported within 30 days of purchase? Sorry. And you don’t get 100% of what you spent due to unspecified charges. I talked to three Customs officers and a “question line” at the Capitol, and got the impression that it had never actually happened.

The only possibility seems to not pay Customs or GST in the first place. One store (where we got our “Southern Hemisphere” compass) just accepted that it was going to be exported and didn’t charge GST. I tried that with other stores and they all said that they would never get away with it in a tax audit. Another way is to find an experienced ship supplier (ask Customs, they know the good ones). At least in Australia, we were able to get “ships stores” (read rum, whiskey and beer) for about 1/2 the price in a bottle shop. I had charts for the Pacific shipped in from the States and had to pay significant duties on it. I tried to get it back from Customs and they said that it was FedEx’s fault for how they brought it in. They said that FedEx focuses only on speed of delivery, even if it means they make no effort to get your goods in without duty. Customs suggested that an experienced Broker could have easily avoided duty on my charts, though it might have taken longer.

Supposedly New Zealand is sufficiently enlightened that when you arrive you can get a certificate that, if presented to a supplier, can enable you to avoid VAT/GST. We’ll see.

All is well.