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Tax trouble, is this your story?

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I've been in yachting for five years, and been ignorant about  my tax responsibilities.

 

At 28 I've accumulated a tidy sum and thought I was being smart until the taxation department contacted me, via my parents.

 

I'm being audited and don't even have an accountant, never have.

 

Please read my story and offer any advice…….Anyone in yachting can face what I'm dealing with when they ignore tax and try to bring the money back into there home country.

 

I was  hoping to buy a house. But thing have changed my friends…..

 

Fives years of cash, an American Bank Account and a Offshore Account worked for me, until I decided to send money home, in an effort to buy a property. My first mistake was opening a bank account in my home town and slowly making deposits by check. You know $5000.00 here, $12000.00 there and so on.

 

When I deposited a third check, with my Mums help that's when the tax office called home.

 

My Mum called me, and said that  I needed to call the commonwealth tax office..

 

I panicked because I now needed to prove residency outside of Australia. I am also required to prove I've filed taxes where I am a resident.

 

For the past few years I've called Florida home, bought a cheap car and done short term rentals when the boats in refit or dockside.

 

How do I make myself legit for the Australian taxation office?????

 

Since 2011 I've failed to file for taxes and declare an income.

 

I'm in the USA on a B1B2 visa, have a Bank of America account and a Lloyd's TSB offshore account. Have not paid taxes since I was 21, never realizing I was supposed file each year.

 

Aside from the USA I've worked in the Caribbean and the Mediterranean, and am onto my forth boat.

 

My employers didn't take taxes out, nobody ever explained  my tax obligations while I floated around the world in the bubble, we call Professional Yachting.

 

No taxes paid anywhere else……No official place of residency, except Australia because that's the address and phone number I've always used as a point of contact. Mail, Banking Address and Everything.

I think what got me in trouble was the amount and frequency I was suddenly sending money home.

 

I'm screwed for back taxes, but on what I've got no paperwork to speak of except cash, check and wire transfer deposits into my two overseas  accounts.

 

I've written to past captains and they tell me I'm on my own and feel lost.

 

I'm now realizing this is mostly my fault, but also feel past and present employers and the crew agents failed to inform me about tax responsibilities.

 

Are past employers and crew agents also on the hook for my taxes???

 

It's seems odd to me that a little fish like me is on the chopping block, when it's always the big fish avoiding tax.  Yachting is a Grey area which is becoming more Black and White.

 

There is no mechanism I'm aware of for paying taxes, when working on yachts. Except for declaring myself as a business back home????

 

I really am scared, feel the MLC2006 is partly to blame because it's supposed to legitimize employment onboard ships and yachts. Which include tax, insurance as well as the health and wellbeing of seafarers.


Hi,
Simple, get right into marinetax.com and be 100% honest.
It's not the boats or anyone else for that matter job to ensure your tax, it's your bag..
good luck with your payment, I feel it will be a big one depending on earnings and time in your home country etc
Posted by: Jason turner at 23/12/2016 17:33


Hi mate

I have been in the industry for the past 4 years and fortunately I had been given the advice and got in contact with seatax they are based in London and they are really on it.... As far as the back log I am not sure what the situation is.... But what I can say is that. As a seaman with an off shore bank account you can spend up to 120 days in the UK without been liable for tax. On the money you have been earning... But you are we are classed as self employed to the tax man. So the boats you work on legally have no responsibility for your tax and they don't need to advise you as you will probably have more than one nationality of crew member on board and tax laws are different around the world... So from what I can see.... If you can start to get together all your flight tickets in and out of the UK and statements together... Get in touch with seatax and explain your situation they will give you a lot more advice on your next step. There is no need to panic... The worst that will happen is you will owe the tax man some money. But I hope this helps... As I said... I have been with seatax for 4 years and they are brilliant!
Posted by: Jamie at 23/12/2016 17:49


With any luck, you may be able to claim tax nomad status. It that depends on where you spent your days every tax year - on average anything over 120 days in the US per year makes you liable to pay tax there, unless you claim double taxation(which is not your case)... it's rolling 90 days average in the UK , 180 days in Greece, etc... however if you have spent more than allowed for tax purposes in the country, you will need to pay back the taxes - you can potentially choose whether you do this in Australia (you ll have to declare almost income, pay taxes and fines on that) and claim double tax relief in other countries where you spend more than taxable amount of days, or you can try to claim tax residency in the country where you spent most of your time and pay taxes there - compare relative tax rates ... That's just a start... good luck!
Posted by: Inna at 23/12/2016 17:57


the world change.....
the economie change
remimber in 2008 president OBAMA was in Suiszerland to ask the name of all americain citizen
i m french
french captain 25 years in the yachting
sailing around the world for thindustrie arround the world and each years i paid my tax to my country also when i m out
cause in my country there is hospital speed way school
when you use the train in france and cote d azur i pay one part of your ticket
the box is now empty
each country looking after money
the world change
captain jean pierre
Posted by: jean pierre at 23/12/2016 18:27


The 'test' for residency in Australia or ANY OTHER COUNTRY is 180 days per annum - you should be able to prove you've not been a resident over the period they're trying to collect taxes from you. My accountnt contacted me for the first few years post exiting Australia regarding my obligations for which I have none. However, if you have a residence in Australia before you left the country you may find you have obligations there regardless.
Posted by: Ingrid at 23/12/2016 18:29


Keep minimum funds in your bank of America account - otherwise you may have tax exposure in the USA, depending on time spent there (which I imagine is a lot, as you went to the trouble of opening an American account!)
After 5 years of not filing tax returns I am amazed that you feel that it is other peoples fault that they did not advise or educate you!. It is every individual crew members responsibility to take care of their own tax contributions. Most employment contracts state this. Just because you did not take financial advise on how to send your tax free funds back to Australia is no ones fault but yours.
I personally advise my crew to file tax returns and advise them of the potential consequences of not doing this. However, it is not my responsibility to do so. The internet is a wealth of information and there are plenty of people who will aid to steer you out of this mess as mentioned in above posts. I would also contact a local Australian financial advisor to assist with this, as they will be more aware of your local tax laws. Good luck and remember, tax avoidance is a crime! - It's how they incarcerated Al Capone!!!
Posted by: Ben at 23/12/2016 18:34


In the US Tax Avoidance is your duty. It is the practice of using whatever means are available to you within the Internal Revenue Code the to lower your tax liability. Tax evasion is illegal.
Posted by: Courtland at 23/12/2016 19:38


You do pose some interesting questions as far as tax liability of the vessel owners on which you worked.

I doubt you'll see a lot of sympathy from Americans. Who were told one of the reasons you were employed being foreign over them is due to taxes. Or a lack thereof.

Empathy, you may find. No one that I know if likes to give a portion of their earnings to the government.

You played the big man... Made large deposits, and quickly got caught on tax evasion. And now peeing in your pants like a little girl. Telling your entire story of tax evasion, pointing the finger at the entire industry in doing so. Acting like you were born yesterday and didn't know you were suppose to pay taxes on your earnings.

What do you do now you ask.
The first thing I'd suggest is:
Man up, face the music like a man. And that doesn't mean drag everyone down with you by posting "how things are" on a public forum like a town crier.

You want tax advice on how to handle your taxes now that you got caught for tax evasion? That's a reasonable question.

I suggest you find a tax attorney familiar with those working in the industry and abroad. Perhaps your crew mates know of one or two.

Then handle it like a man. Or at least with some semblance of honor.

Learn how to do it right before you go taking shortcuts. Or in your case, skipping steps all together.
Posted by: Chase at 23/12/2016 22:17


I disagree with the above post. Really I wish there were more posts and discussion on this topic.
Starting out in yachting how is anyone meant to know about any of this? Your not born a tax expert and need to learn what to do. There is basically zilch on the internet regarding Australian yacht crew and their tax situaion.
For me I basically called around to about 5 or 6 so called expat tax specialists in Australia trying to get advice on what to do. This is just after I started yachting.
There is NO information on the internet that caters specifically to Aussies situation which is not the same as the UK or US or south africa.
It really sucks.
It has taken about 9 months to get things sort of figured out. Sorry to say but it looks like you are knee deep in brown.
The people saying that you need to be out of the country more than 6 months... that alone is not going to help you. I think that is the main UK thing where it seems to be more black and white. In Australia this is just 1 of many things.
I believe the ATO often request double or more taxes from people in your situation as a punishment. I have a link of one case like this where they requested hundreds of thousands of dollars but I can't be bothered looking for it.
Here is another link which I will make available that I think would apply to most Aussie yacht crews situation https://drive.google.com/file/d/0B_MCvrvBVaa7ZWtOVFk0TTVZYXlCSnpiNzl5d3NuTnQ4QmdR/view?usp=drivesdk
Basically the correct way to do things is to get official residency in another country and finish with everything in Australia. You should have recorded correspondance with your super company. Recorded correspondance of asking whether your entitled to medicare as a non resident. Medicare is another grey area and I am still awaiting their reply.
You should have filed a final tax return.
All the departure cards in and out of Australia come into question as well. You should have filled them out correctly and kept records.
Should have closed all accounts in oz and sold assets.
Basically making a strong case for yourself as a non resident of australia.
The hardest peice of that puzzle is that you actually need official residency in another country.
For the first couple of years of this they seem to often call ot a "transitional period" and still tax you. Theres a lot of examples in this link http://law.ato.gov.au/atolaw/view.htm?dbwidetocone=07%3AATO%20Rulings%20and%20Determinations%20(Including%20GST%20Bulletins)%3ABy%20Type%3ARulings%3ATaxation%3AOld%20Series%3A2600-2700%3A%23026000002650%23IT%202650%20-%20Income%20tax%26c%20residency%20-%20permanent%20place%20of%20abode%20outside%20Australia%3B
For me I am getting a marriage visa and renting a place in another country that is empty 8 months of year.
There is an Australian agency called AUSTRAC which monitors money in and out of australia amongst other things. Your undoing would have been getting them interested when trying to move your money back.
A better way is to have an investment account in oz where the lack of franking credits cancels out the higher capital gains tax that you are liable for as a non resident. Then when you want to move the money and buy a home you don't need to as it is already there and you can crystallise it in a couple of days.
Its all extremely complex and I don't profess to be an expert at all.
Actually reading your post has enlightened me to the fact they may also want to see records that I have paid taxes in my country of residency. This is no doubt another hoop to jump through and will need to be approached differently in different situations.
For me personally I disregard these marinetax sort of places. I don't see why anyone would want to have a company on UK or anywhere else take care of an Australian tax problem. Its like going to russia to buy chinese food when your in China already.
I did contact YFSOL once and there solution to anything was of course to put money in an investment account ,anaged by them.... yea right.
I have also heard of "audit insurance" but having looked into it much.
In your situation right now you do need to kind of face the music I think and take it like a man. You are deeep in the poo poo unfortunately. Good luck with that.
Posted by: chiko_roll at 24/12/2016 00:18


I am an Australian who has just gone through the process of seeking advice to be sure of my situation and clarify all the hearsay.

8 years yachting for me and still got in, and filed Tax Retuns every year as a non resident, so after hearing the horror stories I got in contact with

http://waterhousetaxlawyers.com.au

Turns out there is nothing in Australian Law that states you must pay tax elsewhere. As we claim 'non-resident' the muppets at ATO believe you must be a reisdent of somewhere, and hence pay tax. The reality is the yacht is out place of residence, and throgh the advice and assessment of Waterhouse Lawyers they can justify this through applying the ATO means test and precious case history to your situation over Your years away. If their assssment and advice determines you to be a non resident for tax purposes then you are all good.

At the very least connsulting them should significantly reduce your tax liability. Advice is not free, but a lot less than the ATO bill with penaltities!

I also discussed my future plans to buy property, and as long as it is for 'investment purposes' then I will continue to maintain my non residency status for the years ahead in yachting, and have no tax liability.

All the best, and be sure to give feedback of your experience.
Posted by: Luke Hodge at 24/12/2016 02:48


UNCLOS was ratified by most of countries of the world, which say that also yachts belong to flag state jurisdiction.
Shortly, if you are, for example, under Cayman Islands flag, your tax obligation fall under CI regulation i.e. income tax is 0%.
Posted by: Andy at 24/12/2016 07:34


"nobody ever explained my tax obligations "

"but also feel past and present employers and the crew agents failed to inform me about tax responsibilities."

The sense of entitlement and failure to TRULY grasp what being an adult is strong with this one.

Get ready to be bent over and TRULY reamed by the tax authority for outstanding tax and big fines.

Australia has a law that requires you to pay tax in Australia if you ARE NOT PAYING tax anywhere else in the world, regardless of how long you spend in Australia. I know someone who has been through this, they are still paying the interest on the fine and owned tax as they didn't have the cash to pay the bill immediately, and this is 5yrs later. The USA and many other countries have this same law.

Expensive way to learn YOU are an ADULT and it is YOUR responsibility to find out what you owe and where you owe it.

Read your contract, it's all in their.... no tax is taken from your salary, it is your responsibility to do what is needed.

Stop trying to blame others and take responsibility for your actions, or lack thereof.
Posted by: Angry Yacht Chef at 24/12/2016 15:56


Ignorance and/or avoidance is not 9/10's of the law. It is totally your responsibility. What did you think was going to happen? And, no (as someone suggested . . . . perhaps another tax dodger)can you claim being a nomad. One has to have a domicile. For instance, you can't sell your home in a tax entity state/country, buy an RV and claim you don't live anywhere. Wherever your last legal residency is (no matter if you live on a boat, in an RV or . . . . perhaps UNDER A ROCK??? in this case), you have to have a legal domicile. Where were you born, where do you vote, register a vehicle last? That's your home domicile.

Pay your taxes . . . . and keep up with them from here on in. It's best to be on the up and up about such things. It certainly makes it easier to sleep at night, wouldn't you agree???
Posted by: Lori at 25/12/2016 01:04


This is like someone saying.....

"But nobody told me I needed to brush my teeth everyday"....

as their teeth fall out....

Grown a pair.
Posted by: Ron at 27/12/2016 09:21


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