Boaters, Taxes & Fees

When Ontario instituted the 13% 'harmonized tax' (HST combines 8% provincial sales tax with 5% GST), Ontario boaters started to pay an extra 8% on previously exempt costs: dockage, winter storage, mast stepping, haulout, holding tank pumpout, fuel and brokerage fees. (Nova Scotia, New Brunswick and Newfoundland have HST. Alberta has no sales tax.)

[Thanks to Michael McGoldrick <mcsail@magma.ca>. Much of this is distilled from his lengthy research on the subject.]

There is a dangerous misconception among non-boaters that boaters do not pay their fair share for government services such as navigation buoys, Coast Guard, Search & Rescue, marine radio and weather forecasts. Non-boaters and legislators wrongly think that boaters do not pay taxes and therefore should be targetted for new revenue.

Boaters pay many kinds of taxes and fees, such as VHF licence fees and fees to use federal harbours and heritage canals. Less obvious are the portion of mooring fees charged by marinas to pay the rent that government charges for recreational harbours.

When it comes to taxes, it is easier to see where boaters are paying. All boaters in Canada now pay Goods and Services Tax on their marina fees, club fees, mooring fees, boat insurance premiums, boat repairs, and all other services.

Canadians in most provinces pay a combination of GST (federal goods and services tax) and PST (provincial sales tax) when buying a new boat and or boat equipment. In most provinces this adds a hefty amount to the price. The only way to save money on a new boat is with a trade-in, if you only need to pay sales tax on the difference.

How to Buy a Boat

Amazingly, most provinces continue to collect a provincial sales tax (PST) each and every time a boat is sold on the used market. Alberta there is no sales tax at all! Nova Scotia, New Brunswick and Newfoundland joined their PST with the GST in 1997 and residents in those provinces now pay a 13% HST (harmonized sales tax). When Ontario joins this group, their boaters will start to pay an extra 8% on previously exempt costs: dockage, winter storage, mast stepping, haulout, holding tank pumpout, fuel and brokerage fees.

Boaters pay tax when they buy fuel for their boat. This may not add up to much for sailboats, but owners of powerboats with large engines will end up paying a tidy sum to governments for an afternoon on the water. There is no break on fuel tax for boaters in Canada, even though they do not use roads, bridges and ferries, the purpose of fuel taxes. Farming and construction vehicles can buy less expensive gas, because these vehicles are not using the roads, but this is not made available to boaters. Why not? (Boaters should complain to their MP/MPP.)

None of the taxes - GST, PST, sales and fuel taxes - are directed towards funding of any recreational boating services. Despite charging boaters fees and taxes, the government does not provide many services specifically for the recreational boating community. In fact, there has been a recent rash of cutbacks in services used by recreational boats such as navigational aids, weather forecasting, and vessel towing. This is because commercial ships with electronic navigation and charting equipment no longer require the services used by pleasure boats and do not want to pay for them.

In the U.S., boaters who paid fuel tax may be able to get a refund of all or part of that ‘highway use tax’ depending on the state in which the fuel was purchased, according to American Boating Association. Many states use the tax for boating programs, but (in 2009) ten states now refund part of the tax. The remaining states and all Canadian provinces need to be reminded that taxing fuel that is not used for highways (such as boats) is unfair.

Federal and provincial governments regularly propose new boat operator and vessel licence and registration fees. It is easy to imagine future increases -- and the money would not necessarily be used to provide boating services.

Oddly enough, many boaters seem to think licences are a good idea, arguing that "regulation" will provide fewer idiots on the water. Boaters in Canada are almost completely unorganized, which makes them particularly vulnerable to new government fees and taxes. Boaters know the public thinks of them as "rich boaters", but they don't really realize that public policy is built on these misconceptions.

Another casualty of the governments' revenue generating plans may be the willingness of volunteers in organizations to continue donating their time to teach boating courses, set and mark exams, just so students can get an operator's licence. With civil servants being "downsized", the volunteers who work for these organiztions might well ask themselves how much of the government's work they are willing to do.

The federal government has exclusive authority when it comes to dealing with boating (more specifically, "Navigation and Shipping") in Canada. Parliament will probably delegate the administration of matters coming under its jurisdiction to the provinces, but they cannot delegate the legistative authority.

HST 'harmonized tax' for Boaters

When Ontario's 13% HST began July 1, 2010, the 8% PST (provincial sales tax) was combined with the 5% GST (good and services tax). The 'harmonized tax' of 13% covers a wide range of services previously exempt from Ontario PST. This basically means that Ontario boaters will pay 13% instead of 5% on almost all marine services. [Government Directory: Revenue Canada]

With the HST, Ontario boaters will begin paying 8% more tax on these previously PST-exempt costs (other provinces have different PST exemptions):

  1. dockage, mooring
  2. winter storage
  3. mechanic, repair services
  4. mast stepping
  5. haulout & launching
  6. holding tank pump out
  7. hydro fees
  8. fuels (gas, diesel, oil, propane)
  9. safety equipment
  10. boat brokerage fees
  11. marine surveys
  12. legal services
  13. cell phone, internet services
  14. taxi rides
  15. camping fees
  16. meals under $4
  17. mutual fund management fees

You may notice that this list contains many of the expenses you have during an average year on the water. Add up your bills for these items and multiply by .08 to calculate the additional tax you will have to pay. The average cruiser using marina services and buying fuels will pay hundreds of dollars more every year. Since HST cuts costs for businesses, this should have resulted in lower prices, but that has not happened.

Nova Scotia, New Brunswick, and Newfoundland and Labrador harmonized their PSTs with the GST in 1997. Alberta has no sales, paying only GST. British Columbia plans a 12% HST in 2010. Quebec will have a parallel system. Manitoba and Saskatchewan do not currently have any plans to convert.

What Can You Do

If you wish to be informed or fight government proposals, you should do the following:

  1. Join a boating organization or boat owners or yacht club
  2. Learn about the laws such as the Federal Contraventions Act, new regulations, changes to the Canada Shipping Act, and Small Vessels Act, etc. (Canadian Boating News)
  3. Learn about proposed laws that will affect recreational boaters such as boat licences and operator licence including age restrictions.
  4. Write your MP (federal Member of Parliament), the relevant federal ministers, your local MPP (member of the provincial legislature), a regional Coast Guard office and the Commissioner of the Canadian Coast Guard. Tell them that boaters pay their share of taxes and fees. If you are not wealthy, be sure to say so. Most boats cost less than a family car and certainly less than a cottage.

Mailing addresses

Minister of Transportation,
Room 707
Confederation Building,
House of Commons,
Ottawa, Ontario
K1A 0A6

Minister of Fisheries & Oceans
Room 207
Confederation Building,
House of Commons,
Ottawa, Ontario
K1A 0A6

Commissioner,
Canadian Coast Guard,
Canada Building
Slater Street,
Ottawa, Ontario,
K1A 0N7

The Ministry of Transportation of Ontario,
Passenger Transportation Policy Office
1201 Wilson Avenue,
3rd Floor, West Tower, 344
Downsview, Ontario
M3M 1J8

Chairman of the House of Commons Standing Committee on Transportation
House of Commons
Parliament Buildings
Wellington Street
Ottawa, Ontario
K1A 0A6

Co-Chair of the Joint Federal/Ontario Working Group
-----------------------------------------------------------
Canadian Coast Guard     Ontario Ministry of Transportation
344 Slater Street        1201 Wilson Avenue
Ottawa, Ontario          Downsview, Ontario
K1A 0N7                  M3M 1J8
Fax: (613)990-1682       Fax: (416)235-4932

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