Marina and boat dealer tax services: the slip, the sale, and the luxury tax

HST on slips and storage: taxable, not exempt

Marina slip rentals and winter storage are taxable supplies at 13 percent in Ontario, the same as a service or a commercial lease, and they do not qualify for the exemption that applies to long-term residential rent — a mix-up worth clearing up with customers directly, since the question comes up every renewal season. See our answer on HST on commercial versus residential rent for the underlying rule. Deposits collected for a future season are still subject to HST when the service is eventually delivered, not necessarily when the deposit lands, so the timing of the tax has to track the timing of the deferred-revenue recognition, not the cash.

Boat sales carry the same 13 percent HST as any other retail sale, calculated on the price net of any trade-in allowance where a used boat is accepted against a new purchase, in line with the same logic applied at car dealerships. Brokered used-boat sales, where the dealer sells a customer-owned boat on consignment, generally attract HST only on the dealer's commission rather than the full sale price, and the two arrangements should never be coded to the same revenue account.

The federal luxury tax on higher-priced boats

Since September 2022, Canada's Select Luxury Items Tax Act has applied a federal tax to vessels for personal use priced above $250,000, calculated as the lesser of 20 percent of the amount over that threshold or 10 percent of the full sale price. It applies at the point of sale or import, generally falls to the dealer to collect and remit, and it sits on top of HST rather than replacing any of it. Any dealership selling into that price band needs the luxury-tax calculation built into the deal file before the customer signs, not discovered afterward. The tax applies to the vessel itself and to certain equipment or improvements installed at or before delivery, so a buyer who tries to structure part of the price as a separate accessories invoice to stay under the threshold is not actually avoiding the tax — the dealer remains on the hook for getting the calculation right.

CCA across a very physical business

A marina's capital assets span several CCA classes, and lumping them together understates what is actually available to claim. Floating docks generally fall into Class 8 at 20 percent as equipment rather than a building, while a permanent marina building or service shop sits in Class 1 at 4 percent; travel lifts, forklifts, and haul-out equipment are typically Class 8 as well. Getting the split right on a large capital project — a new dock system or a travel lift replacement — is worth doing at the time of purchase rather than reconstructing it at year end.

Demo boats and courtesy loaners used for customer sea trials sit in inventory rather than as depreciable equipment as long as they remain held for sale, which is a distinction worth flagging to whoever is coding invoices, since it is easy to book a demo unit as a fixed asset by habit.

Filing around a five-month season

Whether the business runs as a T2125 sole proprietorship or a T2 corporation, the fiscal year and instalment planning should reflect when the cash actually arrives — heavily weighted to spring deposits and the summer season — rather than a generic calendar assumption. HST filing frequency deserves the same attention, since a marina can swing from a large net-remittance quarter in spring bookings to a modest one in the off-season. Choosing a fiscal year-end that falls after the season closes, rather than mid-season, also means the return is prepared from a complete picture of how the year actually performed instead of an estimate of what the remaining months might bring.

The structural question of incorporation, and whether the marina real estate should sit in a separate entity, is covered on our incorporation page for marine businesses, and the books this return is built from come from our marina bookkeeping service.