Duty and GST Issues of Permanently Importing a vessel into New Zealand

In most circumstances, the owner of a vessel that is imported into New Zealand will have to pay duty (5%) and GST (15%) on arrival of the vessel in New Zealand. However, vessels manufactured in countries which have entered into a free trade agreement with New Zealand will not attract duty (5%). The New Zealand Ministry of Foreign Affairs and Trade has a list on its website of countries with which New Zealand has entered into free trade agreements.

Import Duty (if any) and GST is calculated with reference to the value of the vessel as at the date of importation. In most circumstances, the date of importation is the date upon which the vessel is permanently imported into New Zealand. The import duty and GST will be payable to New Zealand Customs at the time of import.

If the importer of record is registered for New Zealand GST prior to the import occurring, the amount of GST can be fully claimed in the next GST return filed with Inland Revenue.

Depreciation

The starting point is that the vessel must have been owned by the same person or entity for a minimum of three months. If this criterion is met, the depreciation calculation starts at the date of settlement rather than after three months of ownership.

New Zealand Customs allows the starting value of the vessel to be depreciated by 10% for every year of ownership up to a maximum of 80% of the starting value based on the length of ownership, up to the date it is imported into New Zealand. Should the value of the vessel be in a currency other than New Zealand dollars, New Zealand Customs uses the exchange rate on the date of import to calculate the New Zealand dollar value.

New Zealand Customs has also advised that if the owners consider that the value of the vessel for Customs valuation purposes should be below 80% of the starting value, then a valuation can be conducted by a registered marine valuer at the expense of the owners.

In the event that a foreign owned vessel is offered for sale or sold in New Zealand whilst under a TIE, it is prudent to engage Customs in the process, particularly where the values declared on the TIE upon entry to New Zealand may differ from the sale value of the vessel. If a foreign owned vessel is being sold in New Zealand while under a TIE it is not uncommon for Customs to request evidence of the vessel being exported (such as a booking confirmation for a carriage of yacht contract) to permit the sale outside of the terms of the TIE.

A further matter to consider if a foreign owned vessel is sold to a New Zealand resident or citizen, is whether the prospective foreign seller should formally import the vessel prior to the closing of the sale, to ensure that the parties can benefit from a lower duty and GST calculation.

If you are importing a vessel into New Zealand or wish to offer your vessel for charter whilst in New Zealand and have any questions relating to duty and GST issues, please contact Peter Dawson on +64 27 229 9624 or peter@maritimelaw.co.nz , or Troy Stade on +64 27 368 6730 or troy@maritimelaw.co.nz.