My NAFTA Boat Has a Taiwanese Hull

[PrairieSkipper]

I am posting this because it may be helpful, or at least amusing to someone.

I bought a 1986 Hylas 42 and imported it to Canada in 2017. Canada Border Services Agency officers came aboard just after I arrived and assessed GST, PST (zero because my home is Alberta) and a 9.5% duty on the purchase price. The CBSA applied the duty because it deemed that the boat had not been made in North America and thereby did not qualify for the 0% duty applicable to NAFTA boats.

I was annoyed for 2 reasons:
1: The CBSA charged the 9.5% duty on things like the sails, rigging, cradle, etc., that were clearly procured after the boat's arrival in the USA.
2: I was taxed on items that had been dutied when they first arrived in the USA and therefore, I was paying a double duty.

Fortunately, the seller provided me with lots of documentation, including the original purchase agreement. After arriving home, I reviewed the agreement more carefully and noticed that only a hull had been bought from Queen Long Marine in Taiwan and explicitly "No spars or Standing Rigging" and also that commissioning would be the responsibility of the buyer. I was able to find the original QLM sales rep who told me how his buyers were amateur racers who added spars, rigging and sails to it and commissioned my sailboat in Michigan.

I did some research and learned that although they have the same duty rate, hulls are classified separately from sailboats in the Canada Customs tariff schedule. Also a hull is defined as a vessel that "does not have the essential character of a vessel of a particular kind," [i.e., if it doesn't have sails and rigging, it's not a sailboat].

I appealed the CBSA's decision and was denied. My Irish heritage kicked in and so I appealed the first denial and 2 more by the CBSA. Finally, my only recourse was to the Canadian International Trade Tribunal which heard my appeal and the CBSA's defence of its decisions in a video hearing. Two months later, the CITT issued its decision that reversed the CBSA and had it refund the duty I paid, plus the GST charged on the duty. I had to complain to the CBSA that I was entitled to interest on my money for 2 years and they paid that too, although at a much lower rate than they would charge if I owed them.

Also, I need to say this. After the original visit on board, I found the CBSA to be intransigent, perfunctory and stunningly incompetent (for example, the CBSA said in a letter: "However, a completed hull, with options such as a shipmate [sic] stove and winches, and only requiring spars and rigging equipment implies the imported hull has the essential character of a sailboat..."). I remain embarrassed as a Canadian.

In any event, if you've read this far and are still interested, the CITT decision can be found here:
https://decisions.citt-tcce.gc.ca/ci...18617/index.do

[Creedence]

I’m glad things worked out in your favor- albeit after a significant and prolonged effort on your part. Good on ya for the persistence.

Also very informative, and I’m sure others will benefit from your experience.

(In before the thread went into the inevitable rabbit hole!)

[flightlead404]

Seems odd to me that the original manufacturer of the boat, who purchased the hull from TW, hadn't already paid the necessary import duties when they brought it into the NAFTA region to complete the vessel.

[h20man]

Congratulations on persevering....

[PrairieSkipper]

Originally Posted by flightlead404

Seems odd to me that the original manufacturer of the boat, who purchased the hull from TW, hadn't already paid the necessary import duties when they brought it into the NAFTA region to complete the vessel.

To FlightLead404
In fact, the original importer would have paid US duties and taxes in 1986 (although I have no record of them). However the imposition of duties has no connection to fairness whatsoever. Sadly, the frontline officers have only a passing acquaintance with the rules and resort to their Sergeant Schultz routine when challenged.
If I had stripped the sailboat of its rigging and spars, there is no question that I would have been forced to pay duty on the hull when it entered Canada and presumably a Mexican would have to pay a third duty upon importing the hull to his or her country.
The key element of this tale is that the vessel acquired its essential character as a sailboat in the USA, making it a NAFTA product.

[Mike OReilly]

My boat is in a similar status. When I imported it into Canada the attending CBSA staff had zero issue treating it as a NAFTA boat. So I guess it really depends on which officer you get.