US citizen keeping boat in BC

[mhclarkealb]

I am a US citizen (New Mexico) who would like to purchase a boat and keep it in BC. It appears I may have a couple options for tax exemption. This seems to be a fairly common yet seemingly complex transaction. Some brokers know about it and other do not. Does anyone have this ironed out yet. Any guidance would be much appreciated.

#1 ---- I have been told I can find a boat currently in BC with a pleasure craft liscense. As long as I don't need a loan. Have a captain bring it over the boarder to Anacortes where I would take delivery. I let Washington State know I will be removing the boat from washington waters, and bring it back to BC. I then transfer the pleasure craft liscense to myself and avoid the BC tax as I am not a resident of BC or canadian citizen. The boat can then travel back and forth to Canada on the pleasure craft liscense but stay indefinitly in Canadian waters without any additional cruising permits. Not being a washington resident allows me to avoid the tax in washington if the boat gets removed in 45 days.

#2 --- Another option which was floated is possibly buying the boat in Washington, and telling the state I will be leaving washington waters avoiding the tax (NM resident). I would then bring the boat to BC and get a cruising permit for each year? Can I get a cruising permit if the boat has yet to be registered in any state or would I need to get a pleasure craft liscense? As a non-resident/candian citizen is it possible to get a pleasure craft liscense without paying tax there? Basically is there a way to buy a boat in the states and make this work. There are many more to choose from south of the boarder.

MC

 

[twistedtree]

Are you also a Canadian citizen? Or just US? Have you identified a boat you want to buy that’s Canadian? Or are you open to buying a US registered boat?

 

[SteveK]

The tax is 12% in Can$. What you are told is not legal but you will get away with it for a while. You southern folk sure do like the loopholes, carry on.
Curious what US authorities will say when an American asks for the annual cruising permit with a Canadian licensed boat. I would hate to be looking over my shoulder wondering which country will make the arrest and seizure.

 

[Ric]

If you want to keep the boat in BC, the easiest route is to buy it in BC and pay the Canadian tax on it. You would then need to US Document the boat and register it in Canada ($10 fee) and put BC numbers at the bow. The Canadian dollar is down, so that's worth considering despite the hefty sales tax rate.
Canada does not have cruising permits but a visiting boat needs to leave BC within a year of entry. The alternative is to buy it in WA without the taxes. You can get a 60d cruising permit but only 45 days to get the boat out of WA. You can take it into Canada and then come back for the rest of the 60d and (before the 61st day) renew for another 60d if you need/want to stay longer in WA waters. Then at some point take it into Canada, and every year thereafter leave BC, clear into the US at the San Juans, and then re-enter Canada. Note that for this to work you need to have the boat US Documented -- otherwise you need to have a state registration (and, if in WA, pay sales tax, registration, and annual use fees).

 

[twistedtree]

If you want to keep the boat in BC, the easiest route is to buy it in BC and pay the Canadian tax on it. You would then need to US Document the boat and register it in Canada ($10 fee) and put BC numbers at the bow. The Canadian dollar is down, so that's worth considering despite the hefty sales tax rate.
Canada does not have cruising permits but a visiting boat needs to leave BC within a year of entry. The alternative is to buy it in WA without the taxes. You can get a 60d cruising permit but only 45 days to get the boat out of WA. You can take it into Canada and then come back for the rest of the 60d and (before the 61st day) renew for another 60d if you need/want to stay longer in WA waters. Then at some point take it into Canada, and every year thereafter leave BC, clear into the US at the San Juans, and then re-enter Canada. Note that for this to work you need to have the boat US Documented -- otherwise you need to have a state registration (and, if in WA, pay sales tax, registration, and annual use fees).

If you are going to document the boat in the us, then I don’t know why you would pay Canadian taxes and register in Canada. As long as you don’t keep the boat in Canada for more than a year at a time, it’s a visiting boat.

That said, the OP said something about being a non-resident Canadian. But maybe he meant that he’s non-resident, and non-Canadian. Perhaps a Canadian can confirm, but my understanding is that if you are a Canadian citizen, Canadian tax triggers when you bring the boat into Canada.

One other consideration is that if you bring a Canadian boat into the US to document it as a US boat, you will be importing it and possible owe import duty. There might be exemptions based on where it was built, and duty may have already been paid, but you will need to prove it which might be difficult.

 

[Ric]

You'd pay Canadian taxes and register to avoid problems with border staff on arrival in Canada after leaving the boat there. We had a couple of bad experiences that would qualify as harassment, and there is occasionally a provincial legislative push to eliminate the "circle the flag" provision that lets a foreign vessel clear into the US and then back into Canada immediately. In WA, by comparison, if your boat stays in state waters under permit for more than 6 months, you have the choice of paying the taxes or staying out of the state for two years. So we opted to pay the tax rather than worry about the issue. A lot depends on how much you pay for the boat -- no way would we have considered paying the taxes on a new boat.
If you bring a formerly Canadian pleasure/recreation US-Documented used boat into the US as an individual, there should be no issues with duty. There's a very simple one-page form to fill out. You can document the boat as soon as it is purchased and while it is still in Canada. We did that when we bought a used Canadian boat in Quebec. If the boat was Canadian Registered, that registry would need to be withdrawn before filing for US documentation. The broker (if you use one) should know the mechanics of that process. The boat cannot stay Canadian registered after sale unless the new owner is a Canadian citizen. A noncitizen can get a vessel license for $10 once the 12% federal and provincial sales taxes have been paid, and displaying that number tells roving patrols that it's not at risk of being an overstayer.

 

[sunchaser]

I kept a US Documented vessel in BC for nearly 20 years. It is easy enough to do but the devil’s in the details. Feel free to PM me for Q&A

 

[tiltrider1]

I know US citizens who own US documented boats and they keep them in Canada full time. I do not know who or how much they pay for the privilege.

I know US citizens who own Canadian registered boats and the boat stays in Canada full time. In fact, the boat can not come to the US because the import duty was never paid on it. They paid all the Canadian taxes on purchase and they continue to pay the required registration fees.

Then there are those who fly under the radar. One US citizen owns a US boat with a mortgage and with US insurance but the boat lives in Canada full time. It lives in a boat house so no one is really aware that it is there year round. This has been going on for years. I fear that if anything serious happened there would be repercussions on both sides of the boarder.

I do know that importing a boat from Canada is very simple but if the boat was not built in the US or Canada you will want to make sure the import fees were paid.

 

[mhclarkealb]

Are you also a Canadian citizen? Or just US? Have you identified a boat you want to buy that’s Canadian? Or are you open to buying a US registered boat?

I am us citizen

 

[mhclarkealb]

I am open to us or Canadian boats. Have a few im looking at but need to work out process for us boat and avoiding us tax by bringing to bc and leaving it there.

 

[sjisailor]

Another factor is how often you will be using it or otherwise in the vicinity.

For my $0.02, I would say to (1) get the boat you want and then (2) find a place to put it in the location you want. Then pay the appropriate registration and taxes, and don't try to engineer some way around the taxes or worry overly about them.

Trying to avoid taxes will compromise either compliance with the law and/or the available choice of boats and/or the locations where you can keep it and use it ... and every boat already has enough compromises we don't need to add more

 

[tiltrider1]

If you buy a boat in the US and avoid taxes by exporting it to Canada, I suspect the Canadians will want you to pay their taxes.

 

[fgarriso]

You're a US citizen so buy a US boat, and document in the US. Documented US boats are legal in Canada.

 

[mhclarkealb]

Thank you for all the replies. I would be fine paying the BC tax unless there is a legal option to avoid it as a US citizen in Canada. I fully intend on spending all manner of cash in Canada on the boat, and all related costs for maintenance ect. I don't intend on using any of the social services or government programs. I am trying to verify a legal option for avoiding the tax. I am just trying to figure in all the costs of purchase. I am looking at 20-30K in tax. Why is everything so complicated. I see why people give up and just pay the tax.

Sounds like fgarriso may have an option for me? I guess I could just buy a US boat, and choose to have it USCG documented. Eliminate the state of Washington registration entirely, and the tax by removing the boat in the allotted time frame. Then bring the boat to Canada and leave it there in a marina on a year long cruising license? Is the USCG documentation enough in Canada for the cruising license. Seems like it should be. Then We would have a year to decide about which side of the boarder we wanted to pay tax on or possibly head over the boarder to US each year and renew the permit?

 

[WillieC2]

Don't forget about the folks who could not get to their boats for 3 years due to COVID.

 

[sjisailor]

Another question involves where you intend ultimately to sell the boat. I expect that seems like a distant question. However, many boat purchases end up selling them within a year or two.

The US boat market is larger and therefore — for those who boat in both US and CA — it is generally easier to sell in the US. For that, a US documented vessel (or state registered) is advantageous for a few reasons, among them, the simplicity of the transaction and that customs duties will have been paid.

 

[twistedtree]

Thank you for all the replies. I would be fine paying the BC tax unless there is a legal option to avoid it as a US citizen in Canada. I fully intend on spending all manner of cash in Canada on the boat, and all related costs for maintenance ect. I don't intend on using any of the social services or government programs. I am trying to verify a legal option for avoiding the tax. I am just trying to figure in all the costs of purchase. I am looking at 20-30K in tax. Why is everything so complicated. I see why people give up and just pay the tax.

Sounds like fgarriso may have an option for me? I guess I could just buy a US boat, and choose to have it USCG documented. Eliminate the state of Washington registration entirely, and the tax by removing the boat in the allotted time frame. Then bring the boat to Canada and leave it there in a marina on a year long cruising license? Is the USCG documentation enough in Canada for the cruising license. Seems like it should be. Then We would have a year to decide about which side of the boarder we wanted to pay tax on or possibly head over the boarder to US each year and renew the permit?

You can do this completely legally and pay no tax at all except possible US import duty which is something like 1.5%

- Buy the boat wherever and US document it, making sure to cancel out any previous registration, license, or documentation.

- If you purchase in WA there is a form to fill out saying you are not a WA resident and don't plan to keep the boat in WA. Check because this might only be available if you buy through a dealer/broker. You then have to remove the boat from WA within 45 days. There are other options to stay in WA longer with corresponding prohibitions on how long before you can return again, but you plan to keep the boat in CN, so I'm assuming 45 days is plenty.

- When you enter Canada you can then as a visiting boat, you can keep it in Canada, tax free, for up to a year. If you are going to leave the boat and go back to the US yourself, there is a form to file, but it seems hit or miss whether various CBPS staff care about this, or are even aware of it. I did get scolded once which is how I found out about it.

- The only catch is that sometime before a year is up you need to remove the boat from Canada. You would do that by going for a cruise in the San Juan Islands, or up to Alaska - your pick. When you return to Canada, the boat can stay for another year from the re-entry date.

There are hundreds of US documented boats that spend their down-time in Canada to avoid triggering WA taxes, and to avoid triggering CA taxes. It's 100% legal, though many people seem to feel it's not if you haven't paid someone something somewhere.

 

[mhclarkealb]

Good point on the resale.

I think or at least hope we learned something from covid, and won't need to do that closing thing anymore but yeah...

Can anyone see a downside to the USCG documentation vs state registration.

 

[twistedtree]

Can anyone see a downside to the USCG documentation vs state registration.

Mostly the opposite. If you state register in WA, you will have to pay use/sales tax which is roughly 10%. Then you pay 0.5% of the boat's value again every year in an excise tax. If you only have the boat in WA in compliance with their non-resident visitor rules, you never trigger those taxes.

 

[Northern Spy]

Take sunchaser up on his offer. (Hi Tom!)

Most of the boats in the Port Sidney Marina, where he kept his boat, are US documented vessels.

 

[mhclarkealb]

You can do this completely legally and pay no tax at all except possible US import duty which is something like 1.5%

- Buy the boat wherever and US document it, making sure to cancel out any previous registration, license, or documentation.

- If you purchase in WA there is a form to fill out saying you are not a WA resident and don't plan to keep the boat in WA. Check because this might only be available if you buy through a dealer/broker. You then have to remove the boat from WA within 45 days. There are other options to stay in WA longer with corresponding prohibitions on how long before you can return again, but you plan to keep the boat in CN, so I'm assuming 45 days is plenty.

- When you enter Canada you can then as a visiting boat, you can keep it in Canada, tax free, for up to a year. If you are going to leave the boat and go back to the US yourself, there is a form to file, but it seems hit or miss whether various CBPS staff care about this, or are even aware of it. I did get scolded once which is how I found out about it.

- The only catch is that sometime before a year is up you need to remove the boat from Canada. You would do that by going for a cruise in the San Juan Islands, or up to Alaska - your pick. When you return to Canada, the boat can stay for another year from the re-entry date.

There are hundreds of US documented boats that spend their down-time in Canada to avoid triggering WA taxes, and to avoid triggering CA taxes. It's 100% legal, though many people seem to feel it's not if you haven't paid someone something somewhere

You can do this completely legally and pay no tax at all except possible US import duty which is something like 1.5%

- Buy the boat wherever and US document it, making sure to cancel out any previous registration, license, or documentation.

- If you purchase in WA there is a form to fill out saying you are not a WA resident and don't plan to keep the boat in WA. Check because this might only be available if you buy through a dealer/broker. You then have to remove the boat from WA within 45 days. There are other options to stay in WA longer with corresponding prohibitions on how long before you can return again, but you plan to keep the boat in CN, so I'm assuming 45 days is plenty.

- When you enter Canada you can then as a visiting boat, you can keep it in Canada, tax free, for up to a year. If you are going to leave the boat and go back to the US yourself, there is a form to file, but it seems hit or miss whether various CBPS staff care about this, or are even aware of it. I did get scolded once which is how I found out about it.

- The only catch is that sometime before a year is up you need to remove the boat from Canada. You would do that by going for a cruise in the San Juan Islands, or up to Alaska - your pick. When you return to Canada, the boat can stay for another year from the re-entry date.

There are hundreds of US documented boats that spend their down-time in Canada to avoid triggering WA taxes, and to avoid triggering CA taxes. It's 100% legal, though many people seem to feel it's not if you haven't paid someone something somewhere.

OK I think I am getting this now.

Buy boat wherever. US document the boat. Pay no Washington tax by leaving the state. Pay no US import tax by having nafta boat if purchased in CA. Bring boat to Canada, and temporarily import/retention of foreign vessels by non-resident Canadians as described on the transport Canada website. Sounds like I would have 12 months to cruise, and am allowed to be in a marina. I can leave the boat, and return to the US periodically as needed.

I am just fuzzy on the removal of the boat in the 12 month limit. Do I need to import the boat back to the US or is visiting the US enough. The transport Canada website states a couple things.
---- Vessels must be removed/leave Canada at the end of the originally declared date-seems to indicate visiting might be enough?
---- It also states boat must be exported by the exportation date --- possibly if I didn't need an extension?
Transport Canada only seems to indicate the need to check in when entering Canada. I assume I don't need to visit customs before I leave. When returning to Canada, and my slip, would CA customs issue me a fresh temp import/retention or would I just get an extension? I don't see a specified timeframe the boat would have to be out of Canada before re-issuing another 12 month importation. Maybe I would need to re-enter Canada before the 12 months passes in order to get extension? Hard to see everything in just a year.

Is there a way to approach the Customs officers on each side. I would like to have the right language in order to be clear with them especially the Canadian side. Would hate to be paying for slip on the wrong side.

Really appreciate all the input here. It's becoming achievable.

 

[sunchaser]

MHC
What is your boat budget? Also, moorage in BC is hard to get. There is lots to consider so don’t jump the gun. It’s all doable but requires a few up front decisions you may find unattractive

 

[twistedtree]

OK I think I am getting this now.

Buy boat wherever. US document the boat. Pay no Washington tax by leaving the state. Pay no US import tax by having nafta boat if purchased in CA. Bring boat to Canada, and temporarily import/retention of foreign vessels by non-resident Canadians as described on the transport Canada website. Sounds like I would have 12 months to cruise, and am allowed to be in a marina. I can leave the boat, and return to the US periodically as needed.

I am just fuzzy on the removal of the boat in the 12 month limit. Do I need to import the boat back to the US or is visiting the US enough. The transport Canada website states a couple things.
---- Vessels must be removed/leave Canada at the end of the originally declared date-seems to indicate visiting might be enough?
---- It also states boat must be exported by the exportation date --- possibly if I didn't need an extension?
Transport Canada only seems to indicate the need to check in when entering Canada. I assume I don't need to visit customs before I leave. When returning to Canada, and my slip, would CA customs issue me a fresh temp import/retention or would I just get an extension? I don't see a specified timeframe the boat would have to be out of Canada before re-issuing another 12 month importation. Maybe I would need to re-enter Canada before the 12 months passes in order to get extension? Hard to see everything in just a year.

Is there a way to approach the Customs officers on each side. I would like to have the right language in order to be clear with them especially the Canadian side. Would hate to be paying for slip on the wrong side.

Really appreciate all the input here. It's becoming achievable.

All you need to do is take the boat out of Canada. So go to WA or AK for a bit, then return to Canada. I have heard that simply checking into the US at one of the San Juan arrival points is sufficient, and you can immediately return to Canada. Just get and retain proof that you exited Canada. Personally, I would stay in WA or AK for longer to enjoy it for a while.

 

[mhclarkealb]

MHC
What is your boat budget? Also, moorage in BC is hard to get. There is lots to consider so don’t jump the gun. It’s all doable but requires a few up front decisions you may find unattractive

250k or so. Yes moorage may be hard to come by. Any advice.

 

[sjisailor]

Get on some wait lists and see what happens. They may say "3 years" but it turns out to be 6 months ... Or "6 months" which turns out to be either instantly or 3 years. Worst case you just lose the wait-list fee.

 

[Colin4]

Insurance might also be a consideration... Insurers will routinely deny a claim where the item was not "properly" purchased. For example, in Canada that can mean a claim for a piece of jewelry that was purchesd out of the country but not declared when the citizen returned. Happens more than you'd think.

 

[Mark Laurnen]

I sympathize with your tax pain. I purchased a US documented boat I FL and shipped it to WA, my home state. I live in CO. Some states do not require a documented vessel to have a state registration, WA is not one of those states. Someday you will pay 10% in tax to be legal … this is either a 10% sales tax in WA up front, or the sales tax in the state of purchase plus the difference from 10% which WA will impose as a use fee. There is a catch. Until the DOCUMENTED boat is “in the water for greater than 60 days”, or “WA becomes the principal place of use”, the documented vessel can remain registered in another (cheaper) state and not be registered in WA. Colorado charged about $100 a year to register. I called the WA officials and they had me on a prolonged hold while they researched this. Finally, they came back to say that as long as the boat was not in the water for more than 60 days a year, the arrangement was legitimate. When I found more time to use the boat, I kept it moored in the water and registered it in WA paying the full 10% fee since CO had never charged sales tax … CO had said the sales tax applied only to the trailer, not the boat! My savings was minimal, but real … I was taxed at a slightly depreciated value compared to what I had actually paid for the boat a few couple of years earlier. The annual fee in WA is .5%, for now. A documented vessel is not required to display the WA registration numbers. One of the few certainties in life is taxes, they will get it one way or another. I guess we need to be happy that we are lucky enough to owe tax on a luxury as enjoyable as a boat.

 

[REO]

We kept a US documented boat in BC for several years. Got a Canada cruising permit each summer, work permit each winter. After several years a customs agent told us to pay the import tax or get out. The bottom line is that avoiding the tax on either side of the boarder is a stress inducing process subject to an individual agents mood of the day.

 

[JoeCanuck]

I've made a transaction 5 years ago using these guys (Hébert et Associés Conseillers Maritime). They are based in Montreal but probably can help you. They are exclusively advising on maritime and pleasure craft transactions.

Using them as advisers when I acquired my boat saved me from a lot of headaches. It was an interprovincial transaction with incomplete documentations when the boat was imported to Canada 15 years ago. This is a different transaction from the one you're considering. However, these would be my go-to guys to set up this transaction the right way..

I hope this helps.

 

[Mark Laurnen]

I agree with REO! It sort of becomes a shell game, and can be a source of stress. The tax authorities are well aware of the scenario, and they do not like it. At the first of every year all WA marinas are supposed to report the boats present, and in WA state the tax people do go down the list to make sure the boats have a current WA state registration. I believe they even go so far as to verify home addresses of owners who maintain out of state registrations. Our tax dollars at work! The only way to avoid this is private moorage outside of an established marina. Also, in Port of Everett they ask for proof of current registration (and insurance) each year. I suspect that avoiding the onerous one time sales/use tax could well cost more in the long run if potential (compounded?) penalties, and potential legal costs, are figured in … and the avoided tax will still be collected, that never expires. Just recently, I believe, a proposal to increase the annual registration fee of .5% value was defeated. This might be our next tax increase.