Charter Revenue
Charter revenue that occurs in open time is shared between the owners, but an owner can also choose to turn over their unused availability, in which case they will receive the revenue unshared.
Gateway charges a standard management fee for all charters, but unlike some companies avoids most little charges that add up to big owner costs in some charter programs – things like maintenance, cleaning, linen service, etc.
And since all Gateway members are owners, why not provide access to the fleet at a discounted rate within the program? That’s why all owners can charter any vessel for 40% less than the advertised summer retail price – just another Gateway program benefit.
It is common for charter companies to over-promise and then under-deliver. The pitch is that you buy the entire yacht (with the commensurate huge capital outlay), and that tax savings and charter revenue will offset a very large portion of your costs (when you buy a boat and place it into charter service, you avoid the sales tax, and it is also possible to claim business expenses such as capital loss if structured correctly – consult your tax professional). This sounds nice, and is indeed more affordable than solo ownership, except then revenues may not materialize as promised, the fees and boat work begin to mount, and the supposed tax savings turn into a use tax every time you go to use your own boat! Many owners put up with this arrangement for a few years but then become disenchanted.
At Gateway, we state upfront that because the joint ownership program drives up utilization, that inherently means there is less opportunity to earn charter revenue – don’t bank on it. However, let’s say that you and the family hit a very busy stretch and know that you won’t be using your share time – let us know as soon as possible and give yourself the greatest opportunity to turn that idle time into revenue – we’ll manage everything and hopefully offset some of your already low costs. If you expect little, then charter revenue will be a pleasant program bonus.
We also recommend paying your sales tax upfront so that you don’t have to be hit with use tax every time you take your yacht out to enjoy it. In fact, because your program entry cost is just a fraction of the entire cost, the sales tax expense is obviously much smaller. So small in fact, that should you not pay it and choose instead to be taxed as you use your yacht, you could end up over time paying more in use tax than you would have in sales tax!
That said, all the tax rules apply if you choose to use them to your advantage, again consult your personal tax professional.
