California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 7 - Specific Kinds of Property and Exemptions Generally › Section 1594 - Watercraft

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) General
				  Exemptions. Tax does not apply to the sale of nor to the storage, use, or other
				  consumption of watercraft which are used, leased to a lessee for use, or sold
				  to persons for leasing to lessees for use either in interstate or foreign
				  commerce, in commercial deep sea fishing, or in transporting persons or
				  property to vessels or offshore drilling platforms located outside the
				  territorial waters of this state.
(1)
				  Interstate or Foreign Commerce. Tax does not apply if the watercraft for which
				  the exemption is claimed is used either exclusively in interstate or foreign
				  commerce involving the transportation of persons or property for hire or both
				  in interstate or foreign commerce and in intrastate commerce provided the
				  principal use of the watercraft is transportation for hire in interstate or
				  foreign commerce. The exemption may apply to watercraft which operates between
				  termini within the state, such as ferry boats or barges operating entirely
				  within the state if they are principally used to transport interstate
				  passengers or cargo and tugs that operate entirely within the state and are
				  principally used to convoy or aid the departure or arrival of vessels to or
				  from points outside the state.
(A) The tax
				  applies with respect to watercraft making voyages both in interstate or foreign
				  commerce and voyages that are exclusively in intrastate commerce where the
				  principal use of the watercraft is in intrastate commerce.
(B) With respect to watercraft sold on or
				  after January 1, 1987, it shall be presumed that the watercraft is not
				  regularly used in the transportation for hire of property or persons if the
				  annual gross receipts from such use of the watercraft do not exceed ten percent
				  (10%) of the cost of the watercraft to the person using it, or twenty-five
				  thousand dollars ($25,000), whichever is less.
(C) With respect to watercraft leased on or
				  after January 1, 1987, it shall be presumed that the watercraft is not
				  regularly used in the transportation for hire of property or persons, if the
				  annual gross receipts of the lessor from the lease of the watercraft to persons
				  using it in this manner do not exceed ten percent (10%) of the cost of the
				  watercraft to the lessor, or twenty-five thousand dollars ($25,000), whichever
				  is less.
(D) The presumptions
				  explained in subdivisions (B) and (C) above may be rebutted by contrary
				  evidence satisfactory to the board showing that the watercraft is regularly
				  used in the transportation for hire of property or persons.
(E) When determining whether watercraft is
				  regularly used by the owner or lessee in the transportation for hire of
				  property or persons, the first 12-month period after the first functional use
				  of the watercraft shall be used. Gross receipts from the transportation for
				  hire of property or persons, whether in interstate or foreign commerce or in
				  intrastate commerce, may be used to meet the minimum gross receipts
				  requirements stipulated in subdivisions (B) and (C) above.