The average boat owner only uses his boat a month or so a year. And costs that come with boat ownership are often high: Maintenance, insurance, berthage... Why not have your boat earn an income while she would otherwise just sit in the marina. It is not a great money-earning scheme but it certainly has a few advantages. To name a few :
- GST claimable on purchase price
- GST to claim on all costs and purchases
- More Tax advantages like deductible finance costs and depreciation
- Maintenance arranged for you ?or even grooming and other services
- Our crew will keep an eye on your vessel
- Your vessel will earn some income to cover costs
A few relevant issues of ownership of a charter vessel in our Marlborough Sounds fleet are described below.
- Charter Management Agreement
Prior to Compass Charter accepting a charter vessel into its fleet a comprehensive charter management agreement between vessel owners and Compass Charters will have to be compiled. Normally an agreement is for an initial term of three years but Compass Charters is prepared to examine amending of time period and other arrangements on an individual owner basis. Under agreement vessel owners accept normal ongoing operating costs for their vessel in respect to annual maintenance, insurance, berthage/storage, marine survey charges, licenses, etc. Compass Charters will be extensively covering advertising and marketing, valeting, loading and checking vessel before/after completion of every charter and in between charters, charter booking service, administration, catering to charter clients requirements, skippering and familiarizations of clients with vessel and surroundings, radio schedule with all vessels while on charter, provide moorings etc.
The crew can also assist in organizing of vessel survey, insurance, berthage, maintenance requirements and other issues.
- Charter Utilization
Depending on type and popularity of a vessel, owners use etc. annual charter utilization period could be over a 100 days per year. The majority of this usage being achieved between the start of December and the end of May. Depending on the suitability of vessel for different seasons or different charter parties, there is still growth potential for further utilization increases with all vessels. A "Skippered only" vessel might not be utilized as much but there is certainly demand for quality cruising & fishing trips.
- Charter Income
Depending on capital value and popularity of the vessels, the owners receive part of gross charter income. Compass Charters will receive as their charter share the balance. Owner's remuneration is paid on a monthly basis.
- Vessel Insurance
Full comprehensive charter insurance is available. Under insurance the vessel is also insured for owners private use anywhere within New Zealand Coastal waters. Charter clients also sign a fully comprehensive charter booking form in which they accept full responsibility for payment of damage etc. Self-drive charters: The security bond they pay will not be less than the excess of the insurance. The clients also sign a form after they had their briefing on their charter vessel. This way they confirm they received plenty of information about the charter vessel, safety equipment, the Sounds, Fishing regulations, etc.
- Owner's Private use of Vessel
In respect to utilization of vessel by owners we are flexible. Our attitude is that as long as a confirmed booking of the vessel is not inconvenienced the vessel is available for private owners use. In addition, owners have the right under the Charter Management Agreement to book the vessel themselves for a specific period. We are flexible on owner usage bookings as long as we know in advance. Just keep in mind that booking the vessel at certain times of year will diminish the revenue.
- Vessel Maintenance
Compass Charters undertake/organize if required all annual ongoing and preventative maintenance to vessels at a realistic hourly rate. We also have direct access to qualified engineers, electricians, and other specialized vessel and equipment personnel. In addition we can offer some trade discounts. After each charter a comprehensive checklist is completed to make sure the vessel is kept up to standard. This way a lot of potential problems are picked up in an early stage.
- Tax Advantages
Owners can register for GST and then claim GST content on purchase price of vessel plus all ongoing annual vessels related operating expenses. However if the vessel is taken out of charter the GST content will have to be paid back to Inland Revenue. A minimum of 12 % depreciation per annum of vessel value is claimable if vessel owners wish to claim depreciation. Possible interest on vessel finance is fully Tax deductible. Also calculated value of any operating loss of vessel can be offset against other private income for tax advantages.
- Charter Surveyed Vessels
Currently in New Zealand all vessels engaged in commercial charter work for hire and reward have to undergo an annual marine survey inspection. It is possible to take a vessel built as a pleasure craft only and then at a later date place the vessel into survey for commercial purposes. It is however advisable and more practical for owners, if interested in chartering, to purchase a vessel built to survey standards or already under MSA management. Depending on design it could be costly or even impossible to bring just any vessel in survey.
Compass Charters Ltd is owner operated with our main business aim to provide honest and prompt service to our vessel owners and charter customers. Emphasis is placed on ensuring all potential charter clients have the necessary skills and attitude to be entrusted with our "bareboat" charter vessels and that all our clients have an enjoyable time out on the water on their crewed or bareboat charter. The current owners have been operating the company since 1998. The current flee is comprised of vessels, varying from 6 to 16 m, being the largest charter fleet available South of Auckland.
We like to upgrade our fleet and maintain the fleet in a good condition. We aim to change the fleet around to keep up with demand in a way that will make it more profitable for all parties. We also like to keep pace with the new design features and increasingly sophisticated chartering requirements. We also like to have a large range of vessels so we can cater for a large public. We currently manage runabouts, an assortment of keelers, sailing Cat and a number of launches. We are definitely looking for modern yachts, sailing catamarans and several types of launches and Power Cats.
We are prepared to discuss with prospective owners the vessel type and design that we feel would complement the fleet and maximize charter revenue and return.
We do demand that the vessel is kept in good condition while it is under contract with us. This means that some of the revenue will have to be spent on the vessel to keep it tidy. Another thing to remember is that having a charter vessel is not the most profitable way of investing.
If you require any further information regarding this concept, please do not hesitate to contact Aaron regarding cash flows & type of charter vessels etc.
Click here to see if we got any charter vessels for sale.