Buying boat in ON, CA and importing into US, CA taxes?

[bill209]

Hi everyone,

I just purchased a boat in Ontario Canada and will be importing the boat into Alexandria Bay, NY. I do have an import broker handling the paperwork for US customs.

I have a fair grasp on what I will be paying on the US side of this transaction, however, I have an open question about whether or not I will need to pay Canadian sales tax on the boat that I’ve purchased, or rather, how to avoid paying any sales tax in Canada.

I was told by the sales broker at the beginning of this process that I would have 30 days to import the boat into the US without incurring Canadian GST.

That being said, I have been told by others that the 30 day restriction is not true, indicating there was more time available to move the boat. hence why I am reaching out to this forum for some help.

Also, if the 30 day period is accurate, is there a way to have it extended as the boat I bought had some issues that had to be resolved first and I will not be able to make the 30 day window.

FWIW, I have reached back out to the sales broker for confirmation, but would feel so much better if I could also get input from people in this forum who may have gone through this process themselves.

Thank you so much for any help you may be able to provide!
Bill

 

[Jeff F]

Is the broker or seller potentially collecting HST? I don't think that's normally the case.

According to this government web site you have 60 days to export and claim the HST back, if you have to pay it.

 

[bill209]

That is a great resource, though that did run me down a bit of a rabbit hole which left me just as confused.

hmmm, based on the above site the ability to get back a rebate within 60 days seems to be for a non-resident “purchaser” but not a non-resident “consumer”. The definition of “consumer” seems to fit me:

a consumer is usually an individual who is buying the goods for their personal use

Not sure if this has any bearing but GST/HST was not collected at the time of purchase.

Also, from a legal perspective, given that I am importing this boat into the US, does that automatically mean that this boat is being exported from Canada?

Investopedia’s article on Harmonize Sales Tax offers a different take;

Foreign purchasers of Canadian products do not have to pay HST provided that the goods or services will be solely used outside of the country.

Canada.ca under the heading of Zero-Rated Supplies states

The following are examples of supplies taxable at 0% (zero-rated):
…
exports (most goods and services for which you charge and
collect the GST/HST in Canada, are zero-rated when exported)

And Sabre602 gave a pretty in-depth reply (reply #12) to a similar question in 2017 based on his experience of buying a boat in British Columbia

2. If you purchase from a BC broker (a "PST Registrant"), they'll collect the tax. [Not sure if the sales broker of my boat is a PST registration]
3. If you purchase from a private party who is not a PST Registrant, it's up to you to voluntarily pay the tax. For BC residents, this 12% tax is collected by ICBC [B]at the time the vehicle is insured & registered[/B]. For non-residents...well...you're not going to register or insure it in BC, so....

At this point, it seems pretty conclusive that I will not owe tax and pretty conclusive that I will.

 

[RT Firefly]

Greetings,
Mr. b. Best to get in touch with CRA (Canada Revenue Agency) for answers. I would e-mail them, ask your questions and hopefully have a WRITTEN reply.

 

[Jeff F]

Not sure if this has any bearing but GST/HST was not collected at the time of purchase.

That's good. So there is no issue with having to claim it back.

FYI for most private sales in Ontario neither the broker nor the seller collect the HST. It's the purchaser's responsibility to report the sale and pay the HST to the Ontario government.

If you import the boat to the US within 60 days of purchase it seems clear to me that there is no tax obligation on your part. So if you've got proof of import that should satisfy any future attempt from Canada to claim the tax due.

As always, consult with professionals...

 

[RT Firefly]

Greetings,
Mr. b. I concur with your interpretation of the regulations BUT it is just that. OUR interpretation. That is why I suggested you get the answers to your questions in writing particularly the possibility of overstaying your 60 days in order to arrange your affairs.
I've dealt with the Canadian government enough to know you're best to cover your butt with something in writing and even then....

 

[bill209]

RT and Jeff, reaching out to the authorities is sound advice, thank you!

And RT, thanks for mentioning that I should reach out to the CRA as there’s no telling how many different organizations I may have contacted before finding the right one. : )

 

[Bacchus]

Bill
I recently got involved assisting a new owner friend w/ delivery of a Quebec boat from Montreal into NY State and I know the broker that was involved and facilitated the import process.

it would be helpful if I know if the boat, is CDN registered (small or large vessel registry,) whether it will be documented or registered in NYS. Will you be bringing it back (w or w/o Capt assist) or is a Capt doing the delivery?

The key is to have all the paperwork completed and ready ahead of time. CBP then just accepts it, otherwise they have to start looking for the info.
My broker friend may be able / willing to provide tips and the proper forms, etc, and the greasy wheel @ Alex Bay, however, if you have engaged an import broker that's their job. If you haven't yet committed and want to discuss the process I can see if I can enable an exchange. The whole process for our situation took about 30 min at Heart Is in A-Bay but everything (filled out forms & req'd paperwork) had been provided and reviewed in advance and the authorities made sure experienced folks were informed and on duty. We had checked in w/ customs re CBP Roam ahead of time so it was just the boat importing transaction that took place.

 

[Bacchus]

Bill
I recently got involved assisting a new owner friend w/ delivery of a Quebec boat from Montreal into NY State and I know the broker that was involved and facilitated the import process.

it would be helpful if I know if the boat, is CDN registered (small or large vessel registry,) whether it will be documented or registered in NYS. Will you be bringing it back (w or w/o Capt assist) or is a Capt doing the delivery?

The key is to have all the paperwork completed and ready ahead of time. CBP then just accepts it, otherwise they have to start looking for the info.
My broker friend may be able / willing to provide tips and the proper forms, etc, and the greasy wheel @ Alex Bay, however, if you have engaged an import broker that's their job. If you haven't yet committed and want to discuss the process I can see if I can enable an exchange. The whole process for our situation took about 30 min at Heart Is in A-Bay but everything (filled out forms & req'd paperwork) had been provided and reviewed in advance and the authorities made sure experienced folks were informed and on duty. We had checked in w/ customs re CBP Roam ahead of time so it was just the boat importing transaction that took place.

 

[WeekendR_Ken]

Bill
I recently got involved assisting a new owner friend w/ delivery of a Quebec boat from Montreal into NY State and I know the broker that was involved and facilitated the import process.

Bill

I am the broker (yacht, not import broker) who arranged the importation that Bacchus described above.

First:
The tax liability differs across the Provinces (for instance QC has no tax on private-to-private boat sales) so you can't look at BC and expect that it applies here.
Also, this is a Provincial question (not a Revenue Canada question.)

Second: Here is the tax situation in ON:
HST does not pertain to this (it's irrelevant but JFYI, HST (harmonized sales tax) combines a lower rate of Ontario Province Retail Sales Tax with GST.

Third:
13% RST applies to any vehicle purchase, including a boat.
The 13% RST would be charged by a boat dealer (who would be registered with ON to collect and remit tax payments.) With a private seller-to-private-buyer, no one is authorized/registered to collect RST, so the RST is supposed to be self-submitted to any Ontario Service Center by the Purchaser.
The purchaser can then apply for a refund of the RST using Form 1181E if the vessel was exported within 30 days from the purchase date. Hard proof of the exportation is required (obviously, copies of CPB paperwork and a receipt for duty collected by CBP on the importation would be hard proof that she was exported and no longer in CA, along with a Notarized Bill of Sale for the date.)

Again, the exportation needs to be within 30 days.

Now, here is the practical answer for your situation:
No one is (was) authorized/registered to collect the RST and no tax police on Lake Ontario will be looking for the tax payment. (They would from a new owner when/if the boat remained in ON.)
So there's no reason to submit the 13% RST simply to ask for it back. HOWEVER, to completely cover your butt I would make sure that the "paperwork" you have shows the CBP importation at Alex Bay is within 30 days of the purchase date when you move her to the US.

You haven't revealed any particulars -- like, how long the delay will be; is your seller cooperative ("re-sell" her to you when you are ready to cross the form of the Bill of Sale you received, where she is (on the hard?); whether you received a valid Title; if the Albin was Registered with Transport Canada; whether she was removed from Registration, etc etc., therefore it's difficult to go beyond simply general procedures/recommendations.
The office to contact re: sales tax liability is not Revenue Canada, it is the
Ontario Ministry of Finance
33 King Street West
PO Box 623
Oshawa ON L1H 8H7
uvip@ontario.ca
1-866-668-8297 x 14710
(Ask for Wendy Russell)

Cheers,
Ken
Weekend'R Yachts

 

[WeekendR_Ken]

Bill

Regarding this thread and your other one about the engine/EPA emissions issue:

First: Engine emissions:
You may be making this more difficult than necessary. If you have the EPA form filled out and signed, and check the box that she is the original engine and is exempt for serial number reason, EPA is not going to come knocking on your door to confiscate the vessel
The simple "proof" (appropriate statement on the EPA form) is that Ford Lehman ceased business in 1991 therefore the engine CANNOT be subject to EPA emissions limits that were (big word) promulgated after 1991.
CBP is not going to question what you have on a signed, filled-out form -- they simply collect it to send onto EPA. Done deal.
If they do not have a filled-out form, then the CBP Inspector will start looking to satisfy him/herself.

Second: Importation at POE Alex Bay:
You are probably paying significant boat bucks to have a Customs Broker do no more than fill out forms that you can do yourself.

If you do it yourself, correctly, the CBP process thru Alex Bay will take about a half-hour for the kind officer to pull your file (paperwork pre-submitted,) flip you upside down, empty your pockets, and send you on your way.

Preparing the CBP paperwork takes a half hour of your time (not counting the time to gather your paperwork, which you need to have anyway.)

Third: Documentation?:
If you intend to USCG Document her certain foreign documents are required for a foreign vessel that have nothing to do with the CBP importation. They are critical to gather in-hand now, rather than when (if) you apply for Documentation and the NVDC emails you that your Application for Initial Documentation is rejected because it was deficient.
Vessel Documentation is outside the customs broker's wheelhouse so likely has not advised you about this.

Cheers,
Ken
Broker, Weekend'R Yachts

 

[RT Firefly]

Greetings,
Mr. WR. Welcome aboard and thanks for that wonderful post.

 

[GeoStr]

I am in the process of selling my Canadian boat to an American south of the border in the PNW. If they pick up the boat in Canada they pay Canadian tax AND American tax. I have to deliver the boat, which I am doing, to the US customs office where they will take possession. The funds are held in escrow which are released when the boat gets to the US.
Canada is much more lenient... I have 45 days to remove a boat I buy in America without paying US tax.

 

[ElGordo]

I am in the process of selling my Canadian boat to an American south of the border in the PNW. If they pick up the boat in Canada they pay Canadian tax AND American tax. I have to deliver the boat, which I am doing, to the US customs office where they will take possession. The funds are held in escrow which are released when the boat gets to the US.
Canada is much more lenient... I have 45 days to remove a boat I buy in America without paying US tax.

This was not my experience. I sold my boat in the PNW and the transaction had to be completed in Canada (we motored to White Rock from Pt. Roberts where I kept the boat). The paper work and financial exchange was completed while physically on the pier and then I helped them take the boat to Anacortes. At Anacortes the CBP questioned the buyers as to where they were physically when they signed and paid for the boat. Had I been in the US when that transaction was completed I would have been on the hook for all sorts of complications, both financially and legally.

 

[Bacchus]

This was not my experience. I sold my boat in the PNW and the transaction had to be completed in Canada (we motored to White Rock from Pt. Roberts where I kept the boat). The paper work and financial exchange was completed while physically on the pier and then I helped them take the boat to Anacortes. At Anacortes the CBP questioned the buyers as to where they were physically when they signed and paid for the boat. Had I been in the US when that transaction was completed I would have been on the hook for all sorts of complications, both financially and legally.

Per post #10 the CDN tax situation varies by province.