Yacht charter to benefit from government investment allowance

Bavaria Yachts and Finlease believe business boat buyers can benefit from the recently proposed increase in investment allowances.

The Federal Government recently announced it would increase the "Temporary Investment Allowance" from 10 to 30 per cent to encourage businesses to invest in capital equipment and vehicles, including charter boats. Taking this lead, Bavaria Yachts Australia and Finlease have worked together to create working models for investors seeking to place new yachts into charter programs.

Bavaria Yachts claims that subject to acceptance by the Senate of the increased allowance, the following will apply -- a "one off tax deduction" equal to 30 per cent of the capital cost of eligible new equipment and vehicles "in addition to the standard depreciation claimed for such assets."

According to Bavaria and Finlease the main qualifying points are:-
>> Applies to new assets only
>> Must have a cost price in excess of $10,000 ($1000 if company turnover is less than $2m per annum)
>> Must be eligible capital equipment (this includes charter yachts on a full-blown business plan)
>> Must be acquired or ordered between December 13, 2008 and June 30, 2009
>> Must be installed and ready for use by June 30, 2010

To be eligible, the companies state a yacht must earn sufficient charter revenue to cover all of the operational and holding costs of the boat and provide a surplus "net income" to the owner before interest and depreciation costs.

Bavaria Yachts claims the total deprecation and investment allowance in year one on a boat costing $300,000 is $121,500 -- ie: 45 per cent of the cost value of the yacht. Bavaria claims if an investor’s marginal tax rate was 45 per cent, then the boat cost is effectively reduced by $54,675 tax savings, before taking into consideration the net charter revenue from the boat.

For more information, contact Bavaria Yachts Australia, tel (02) 9998 9600 or Finlease 1800 358 658.