What are the tax differences between buying a boat in Ontario or in the United States?
There are two major factors that influence taxes: the country of construction and the seller’s place of residence.
The only way to avoid GST and QST is as follows:
Let’s start with the only scenario that allows you to avoid paying GST and QST: when the seller and buyer are residents of Quebec (owners’ home addresses).
Acquisition situation.
If you are acquiring a boat built in North America, such as :
– Sea Ray, Monterey, Regal, Carver, Marquis, Cruisers Yachts, Cobalt
– Wellcraft, Bayliner, Meridian, Larson, Rinker, Silverton, Four Winns
– Chaparral, Boston-Whaler, Chris-Craft, Crownline, Formula, Maxum
– Mastercraft, Malibu, Supra, Mooba, Nautique, Axis, Baja
And many other brands…
GST AND QST PAYABLE.
If you live in the provinces of Quebec, Ontario, New Brunswick or British Columbia, and you purchase a boat from a Canadian province other than Quebec, or from the United States, you will have to pay GST and QST.
If the boat comes from the U.S., both taxes will be payable when it passes through customs, while if it comes from a Canadian province, both taxes will be payable when it is registered with Transport Canada.
The notice of assessment will be sent promptly if you opt for QC registration and may take much longer to reach you if you opt for Blue Book registration. These are two different departments within TRANSPORT CANADA.
But yes, regardless of the type of registration, both taxes are payable.
In fact, Canada has signed a free-trade agreement with Mexico and the United States, which exempts American-made boats from customs duties when they enter Canada.
But beware: if you leave Canadian territory, the customs officer may ask you for documents when you return to Canada, enabling him or her to assess whether taxes or customs duties are payable. You must therefore always be able to prove your assertions, so make sure these documents are on board your boat.
IMPORTANT
Some boaters believe that when the boat is in Ontario and the buyer is from Quebec, there is only one tax to pay: FALSE, both taxes are payable.
Of course, there is no border between the two provinces. When you buy a boat from an individual in Ontario, you don’t pay any taxes to the seller, since he’s not registered with his province’s Ministry of Revenue. You will receive the tax notice when the boat is registered.
In brief:
Purchase of a boat from
from a Canadian province (seller) Province of purchaser
– Ontario
– New Brunswick
– Nova Scotia
– Newfoundland
– Prince Edward Island Quebec
– Manitoba + GST + QST
– Saskatchewan
– Alberta
– British Columbia
Purchase from an American state
All 52 states (USA) Quebec
+ Mexico + GST + QST
N.B. Customs fees MAY apply in addition to taxes.
Customs fees for Canada
No customs fees
If the boat’s manufacturer is of European origin, and the boat is already in Canada, then both GST & QST taxes will also apply, but no customs fees. We assume that the boat is in order, since it is already in Canadian territory.
But verification is customary since if the purchaser leaves Canada, when he returns to Canadian territory, a Canadian customs officer could ask him for proof that customs are in order if the acquisition predates the Canada-Europe Free Trade Treaty (September 21, 2017).
9.5% customs surcharge
If the boat is in the U.S. and is of European manufacture, then when it passes through a Canadian customs post, it will initially be subject to 9.5% customs duty + the two taxes. In effect, the Canada-Europe Free Trade Agreement is then inoperative, since the boat does not come directly from Europe.
Here are a few examples of European manufacturers:
– Azimut, Ferretti, Pershing, Riva, Sunseeker, Princess, Fairline
– Galeon, Beneteau, Jeanneau, Prestige, Sessa, Bavaria, Cobrey, Greenline
– Cranchi, Sealine, Logoon, Leopard, Aquila, Foutaine-Pajot, Sunreef
If you purchase a European-made boat and it comes directly from a European Union or EEC country, then there will be no 9.5% customs duty because of the Free Trade Agreement with Europe. But it must arrive directly in Canada from Europe.
Luxury tax
If you acquire a pre-owned boat that has already had an owner (regardless of origin) before September 1, 2022, the luxury tax does not apply whether the previous owner was from Canada or elsewhere.
This luxury tax applies only to boats valued at more than $250,000 CAD.
The law stipulates that the luxury tax is payable only once in the life of the boat. However, each time a boat is purchased, it must be possible to demonstrate to government authorities that individuals have carried out the necessary research into the application of this new tax to show that they are exempt.
For purchases from a Canadian dealer, the rules are different. This tax applies to boats from 2019 onwards.
So, for example, if you’re buying a Riva 56 Rivamare 2023 in the U.S., the tax will be calculated as follows when you pass through Canadian customs – this is the example where all taxes and fees apply:
Boat purchase price + 10% luxury tax + 9.5% customs + GST + QST
A concrete example: price of the Riva Rivamare 36 (2023), a boat built in Italy (theoretical example):
$1,100,000 USD = $1,493,000 CAD + $141,835 CAD + $81,741 CAD + $171,228 CAD =
Final total: $1,887,894 CAD.
Now we understand why many boaters purchase a boat in the U.S. and never bring it back to Canada.
At that point, you pay no U.S. tax, since you’re Canadian citizens and the boat is Canadian-registered, and since the boat never returns to Canadian territory, no Canadian tax is applicable.
If you have any questions, please contact us.
We are brokers familiar with all types of transactions, especially those outside Canada.
Our acquisition protocol includes:
– Selection
– Negotiation
– Offer to purchase (with conditions)
– Inspections (including examination of oils and liquids)
– Verification of titles and links (verification through a lawyer)
– Conditional acceptance or rejection following inspections and examinations.
– Conclusion
– Choice of pavilion
– Taking possession (insurance in force)
Of course, we follow up with the customer after the purchase. Our experience is always at our customers’ service for any questions relating to our expertise.
DISCLAIMER
The article presented on this page is for information purposes only. This information is provided as editorial (i.e. opinion). The information presented in this article is presented in good faith and, while believed to be correct, is not guaranteed. Ita Yachts Canada does not warrant or assume any legal liability or responsibility for the accuracy, completeness or usefulness of the information and/or images displayed, as they do not suggest anything in relation to this article, indeed no association can be made with respect to the images and the article. All information in this article is subject to change without notice and is without warranty. It is the reader’s responsibility to verify the descriptions and statements contained in this article. The brokers at Ita Yachts Canada assume no responsibility for any conclusions the reader may draw. The purpose of this article is to promote boating in all its forms. It gives one point of view among many. Any reproduction of this article is prohibited.
