ATO Charter Boat Draft Ruling Threatens Tourism & Manufacturing Jobs in Regional Communities

by Guy Pearse on 9 Sep 2002 An ATO Draft Ruling on charter boats announced today has the potential to destroy tourism and manufacturing jobs in many regional communities across Australia, according to an economic impact assessment made public today.

According to the Charter Boat Industry Survival Campaign (CBSIC) - formed in response to the Draft Ruling foreshadowed by the ATO last month - the Tax Office announcement throws in doubt arrangements which have been in operation since 1974 and which have underpinned the growth of the Charter Boat Industry.

The ATO is suggesting that owners whose boats operate in a fleet managed by another business may not be entitled to claim they are in business.This means that such owners may not claim deductions, interest and depreciation on their boats, that they may be taxed on all charter income (including the fleet operator's share) and could be liable for retrospective payments of deductions claimed over the past 4 years.

CBISC today released details of an Economic Impact Assessment of the ATO's proposed direction which warns of a possible 72% contraction in charter boat tourism, a 60% increase in charter boat prices for the few operators able to survive, massive losses to local boat manufacturers, and the loss of up to 1,939 jobs in the regional communities where the industry is concentrated.

The biggest impact would be felt in Cairns, the Whitsundays, the Gold Coast, Pittwater, Sydney Harbour, Gippsland and the River Murray operations out of both Adelaide and Mildura. In other areas, such as Darwin, Port Hinchinbrook, Hervey Bay, Lake Macquarie, and Port Phillip Bay, the Draft Ruling could spell the end to the prospects for solid growth in the charter boat industry.

According to CBISC Chair, Sherry Donaldson, the ATO's announcements have already inflicted major damage on local boat manufacturers in regions like the Illawarra, and the Gold Coast.'Some of our stakeholders have award winning businesses that were booming, and just starting to compete well against importers. Since the ATO's first announcement on this 12 weeks ago boat orders have dried up and many manufacturers are sacking workers for the first time.
These are small businesses in places like Nowra and Wollongong which already suffer from high unemployment.' 'As the AEC report highlights, the jobs being lost and threatened here are mainly people on less than $30,000 a year - so, low to middle income jobs relative to the national average wage of something like $43,000. It's worth keeping in mind with this issue that for every boat owner, we are talking about 4 or so low income jobs at risk in a regional Australian community.' Ms Donaldson said that while the industry was very disappointed that there had been no consultation with the industry prior to the ATO's announcements, the CBISC was preparing to make submissions in good faith to the Tax Office and was hopeful of a speedy resolution accommodating industry concerns.

'We're very confident that the vast majority of our stakeholders are complying with the law, we are not out to protect tax avoiders, but we are extremely concerned to ensure the future of the charter boat industry in Australian communities.' 'We have established a positive and constructive dialogue with the relevant federal Ministers and government MPs, the Opposition also appreciates industry's concerns on this issue. We are very hopeful that common sense will prevail - either in consultation with the ATO or via government intervention if need be.'