Yachting has traditionally been viewed as a grey area when it comes to taxation. Most crew have only declared their income if their native land recognizes them as exempt for taxation purposes.
Sadly that approach is no longer an option due to new banking transparency and reporting regulations that are reshaping international banking. The good old days of having an offshore bank account unknown to your country of residence are as good as gone. If you don’t know what I’m talking about, I suggest you start researching.
Obviously, different nations have different taxation laws, and some are more onerous than others. I’m no tax expert but, as an example, I ran some figures through an Australian tax calculator tool and found that a stewardess earning US$4k per month (approximately AUD$70,000 per annum) would pay in excess of $14,000 tax pa as an Australian resident and, interestingly, $22,750 as a non-resident.
If you’re an Australian head of department, try it for yourself… It might be best if you sit down! Additionally (as a resident) you may be obliged to make national healthcare contributions and take out private health cover in order to avoid a penalty. (In 2016, the penalty was $695 or 2.5% of your income, whichever is higher.)
Annoyingly, Australia does not recognize the majority of foreign health insurance policies and will impose the penalty despite proof of top-level global coverage. I speak from experience when I say that bombarding them with evidence and vigorous protest gets you nowhere.
Fortunately, many nationals won’t be hit nearly as hard as the Aussies.
Legitimate Tax Deductions for Crew
That kind of taxation can hurt, a lot, so is it still worth it? Only you can make that decision but let’s not forget that all your living expenses are paid for as you travel the world for free while enjoying an assortment of unique benefits. And with the right taxation advice, you can learn how to claim deductions, invest in yourself and boost your overall skills and employability - without handing over such a sizable chunk of money to the tax office.
One avenue interior crew should consider is signing up for the PYA GUEST training. The industry has been reluctant to embrace it, and many believe it’s simply another way for trainers to take their hard-earned cash. I’m going to come clean here - this is a view that I shared until quite recently because, from the outside, it seemed that the PYA was getting involved in things they shouldn’t and creating additional courses that would ultimately just cost crew time and money. Ship’s Cook Certificate? Pfttt! What’s with that?
Little did I know, it was actually an MLC requirement, and the PYA worked hard to make it more achievable for crew. If it weren’t for the PYA, the course would have been substantially longer and more painful. Needless to say, my view of the GUEST program changed dramatically, and now that I have a clearer understanding of what GUEST represents, I believe it’s the smartest route for dedicated interior professionals.
From a head of department’s perspective, I like the concept of hiring crew that have obtained training in a facility that had to meet minimum standards for accreditation. This removes the wild card and provides me with reliable team members that I know were trained correctly, making my own job easier. Additionally, the leadership modules on the program are invaluable for heads of department.
Crew Training and Planning Ahead
The GUEST modules will keep you busy for a while, but what next? Get creative! Crew are required to be multi-talented, so there are many options that could qualify as a work-related tax deduction. Think cooking courses, advanced training on computer programs, working towards a Master of Wine qualification, interior design, specialized leadership courses, yoga instructor courses, etc. Try to keep life after yachting in mind and obtain qualifications that will be useful for employment when you step ashore.
Finding time to complete the courses might be the greatest obstacle for crew who aren’t on rotation but think of how you might enjoy “studycations,” such as a Thai massage course in Phuket… with tax deductible flights, accommodation and food perhaps?
Consult with a tax expert that specializes in both yachting and tax law in your home country to understand the best way to structure your employment benefits. Slight adjustments such as who pays for your flights home and your medical coverage might make a big difference.
On the plus side, you won’t be too concerned about how expensive courses are! So plan ahead and maximize how your earnings can work for you.
* Image credit: Pixabay CC0