One for our Australian members

[Ian_Edwards]

If you but a secondhand boat that has been advertised through a broker, do you have to pay GST on it.
I can see that if you buy from a individual GST isn't charged.
If it's from a dealer you are charged.
Am I correct in thinking that if you buy through a broker you just pay GST on the brokerage fee?

 

[rogerthebodger]

If you but a secondhand boat that has been advertised through a broker, do you have to pay GST on it.
I can see that if you buy from a individual GST isn't charged.
If it's from a dealer you are charged.
Am I correct in thinking that if you buy through a broker you just pay GST on the brokerage fee?

Not in Oz but wher I live its Vat and when I purchased al hull from a through a broker I only paid Vat on the brokage fee

 

[William_H]

Yes as I understand it all sales of second hand goods do not attract GST. Only the brokerage fee gets GST. 10% ol'will
(goods and services tax similar to VAT)

 

[Ian_Edwards]

Thanks. I found the official Australian websites difficult to understand. I didn't see any reference to brokers, just dealers. Which I found strange, and I wondered if dealers was being used as catch all word, covering all transactions of second hand boats.

 

[Neeves]

Its GST here in Oz.

The first thing you need to ascertain is/was GST paid originally or has the yacht been imported, GST not paid, and the original intent was to sail the yacht somewhere else before the GST was due. This would still work if you buy the yacht, no GST and sail away.

You thus need to ascertain the import status of the yacht.

GST may be due on work done or additions to a yacht where GST has already been paid (but this would not be common) as any addition would have had GST added already and new equipment would have been invoiced with GST included..

Basically once GST has been paid the yacht is then free of any further GST payments, except for any the broker charges. Is the broker GST registered.

If GST has been paid and you export the yacht - you don't get the GST back (and if you import the boat to the UK I suspect you will effectively pay GST and VAT . If VAT has been paid in anther tax location, like the UK - and you want to import to Oz then GST will be due (unless you re-export).

Jonathan

Thanks. I found the official Australian websites difficult to understand. I didn't see any reference to brokers, just dealers. Which I found strange, and I wondered if dealers was being used as catch all word, covering all transactions of second hand boats.

Not defending Australian linguistics - Just advise - what precisely is the difference between a dealer and a broker?

 

[Ian_Edwards]

I'm assuming that the boat is fully GST paid, as built in Australia or legally imported.

I'm not thinking of importing a boat from the UK, as you suggest GST and transport cost would be too expensive.

For the point of view of the Australian tax authorities I've no idea, I just saw the term dealer, I didn't see the term broker referred to in anything I remember reading, when I was researching buying secondhand boats in Australia.

From a dictionary definition a dealer is:

One who deals; one who has to do, or has concern, with others; esp., a trader, a trafficker, a shopkeeper, a broker, or a merchant.

Which includes the word broker.

To me, I think of a dealer as someone who buys and then sells something, and a broker is someone who facilities a sale for a fee. But it seems that, in general, use that the two terms can be used synonymously.

I also find the Australian government websites more or less impenetrable, but perhaps that's just me.

I just wanted to get some reassurance that the term dealer, excluded the term broker as I understand it, and I got that. Thankyou.

 

[Tranona]

The distinction between a dealer and a broker is critical from both a legal and tax perspective. As you say a dealer buys and sells on his own account. This brings him within the scope of consumer legislation. If he is VAT registered (and would have to be if buying and selling boats because of the low limit for registration) then he will pay VAT on his "margin" using (in the UK) the "Margin" scheme www.gov.uk/vat-margin-schemes

A broker is a professional intermediary who charges for his services and if big enough to be registered charges VAT on his services. A broker is not normally subject to consumer law, but is covered by Law of Contract and Law of Torts just like any other person. The actual boat transaction is a private contract between the seller and buyer.

It is essential to make the distinction which, as you say many people don't, which given the large sums involved and the relative complexity of many boat transactions could be a mistake.

 

[Neeves]

I think there is a danger in imposing UK definitions of Broker and Dealer in the UK and applying them in Australia. As the OP has already found.

A Dealer, typically a legal entity acting as agent for a large yacht builder may also be a Broker, seller of second hand yachts, A Dealer sells new yachts and will charge GST but may also sell the exact same yacht, later in its life, and act as a Broker (and charge a fee for services of finding a buyer for the second hand yacht and those services will be liable to GST). The GST will be applied to the total value of the new yacht, including all the freight and commissioning costs. When the yacht is sold second hand any GST might apply to tidying the second hand yacht for sale, the fee for effecting the sale.

Commonly, or exclusively, the second hand sales contract will be between the seller and the new owner (and as far as I am aware our sales contracts are the same as in the UK). There will be a completely separate contract between the 'facilitating agent' and the seller. This second contract will define who insures the yacht etc etc. When we sold Josepheline the words 'Broker' and 'Dealer' were not used but the responsibilities of each party was clearly defined.

In the OPs case I would expect the sales contract to clearly define the responsibilities, and the route the monies take, (as Tranona says the monies are not small). The buyer of the second hand yachts would also see, or be made aware, of who is responsible for, say insurance and when that responsibility moves from the seller to the new owner.

Most of the contracts are standard - but if the OP is unsure - have a lawyer examine the documents. Don't rely on advice from the internet, or here.

I have noted that a group of individuals will act for, say Bavaria - new and second hand yachts. Same people, same address - but they have different company registrations - but the words Dealer and Broker are not used. Smaller businesses may only have one business name but the scope of the business might cover new and second hand yachts, with separate contracts covering the different transactions.

 

[Tranona]

I think there is a danger in imposing UK definitions of Broker and Dealer in the UK and applying them in Australia. As the OP has already found.

No. They are exactly the same.

The same person/entity can be both/either in different situations. Take my dealings with Clipper Marine, the Bavaria dealer in the UK. I bought my new Bavaria from them. They bought it from the factory and sold it to me. My contract was with them and as a result the transaction falls under both contract law and consumer rights. They took my old boat in part exchange and the contract was between me and them. They sold it as a dealer to a private individual and paid VAT under the margin scheme on any profit they might have made (pretty sure they actually made a small loss). That sale is also governed by consumer law.

They are also one of the biggest brokers selling boats on behalf of owners. The transaction is between the 2 private individuals, but the broker has a contract to represent the seller and charge for his services on which VAT is chargeable. The boat transaction itself is not covered by consumer law.

It is important that one understands the legal distinction as the rights of parties are different depending on which "hat" the dealer/broker is wearing. It really is not difficult to establish when looking at buying a boat to determine who owns it and in what capacity the person you are dealing with is acting.

If you really want to see why this distinction is critical suggest you have a glance at this.casemine.com/judgement/uk/5b46f1ed2c94e0775e7ee38f This is a landmark case of what comes out when things go wrong. Although the specific issue is about the management of client accounts, commonly used by brokers in managing money involved in used boat transactions. It identifies that a clear distinction must be made between the 2 different activities that take place within the same business. Peters was the previous Bavaria dealer to Clipper. As you can imagine Clipper employees, many of whom were with Peters make it very clear which hat they are wearing, as do all other respectable dealer/brokers.