Tax threat hovers over yachts visiting New Zealand

By WAYNE THOMPSON

Marine industry officials want to head off plans by Inland Revenue to tax earnings of superyacht crews visiting New Zealand for next summer's America's Cup.

The pay-as-you-earn (PAYE) tax plans were last night criticised as likely to harm a potential trade of more than $100 million.

Big-spending crews would steer clear of New Zealand as a result of the tax move, said Marine Industries Association chief executive Peter Busfield.

New Zealand should treat this America's Cup as an opportunity to cement its reputation as a superyacht destination, just in case the cup was lost, he said.

The country would earn more from servicing the needs of the visiting yachts than it would from additional tax revenue, said Mr Busfield.

The 2000 America's Cup generated about $180 million in business from superyachts and $127 million for the marine industry.

The department yesterday said the amount of tax expected was impossible to calculate precisely but it would be "several millions".

It has set up an America's Cup project team to advise on tax obligations.

Up to 1200 non-residents are expected in Auckland to work on superyachts or serve racing syndicates during the six months of the cup regatta.

The department said crew members who were non-residents and New Zealanders had always been subject to tax on their earnings while in this country.

Marine Export Group (Marex) executive director Lane Finley said collection of the tax was not pursued during the last cup regatta.

He wanted a meeting with IRD officials to explain why it was against the country's interests to tax crews.

About 100 superyachts, averaging eight crew each, were expected to berth at the America's Cup Village next summer, said the village company's facilities manager, Grant Davidson.

The skipper of a superyacht berthed in Auckland for the second year in a row said it would be the last time if PAYE tax was enforced.

Other vessels would avoid Auckland "like the plague".

"We work offshore and whatever facilities we use we pay for," he said.

"We pay wharf fees and taxes when we buy cars, computers, cameras, windsurfers."

nzherald.co.nz/marine