The Charter Investment bubble arguably burst about a decade ago when a Sydney yacht charter company advertised a charter program that included 80% owners use but 100% tax deduction.

The then tax commissioner Michael Carmody, saw the ad in the Sydney Morning Herald and understandably saw that the taxation laws needed tightening.

The early days of buying a $500,000 boat and depreciating it at 20% creating continual losses (and tax write offs) were gone and investors started to look offshore for better opportunities. There are no figures, but I think that there would to be many hundreds of Australians that have invested in a charter scheme with their yacht based overseas.

For a start, the freight for something like a Beneteau 40 is approximately $40,000 to ship to Australia plus the GST and import levies, making the investment considerably smaller closer to Europe.

There are a wide variety of offers and programs in the Mediterranean – fixed return, partnerships/income share and guaranteed income being the main options but with hybrids of each available.

As a result new yacht additions to charter fleets in Australia has slowed although not completely stopped. It is now mandatory to have an investment plan which is designed to ensure profit is achieved.

For this to happen charter rates had to increase (and they did) to the point where they are among the most expensive in the world (but so is our general holiday accommodation).

Income share does require a lot of trust as it is often difficult to know what is happening to your boat when you are half a world away, fixed arrangements are more straight forward. Several global operators also offer the advantage of yearly charter weeks to be used on your own yacht or a comparable one in their worldwide charter bases and this a significant hook for many.

As always you should seek professional financial advice, but having been in this industry for over 30 years I cannot remember being told any absolute disaster stories (although many have made little money). Often a yacht investor in a charter fleet can be described as mixing business with pleasure and certainly there is a more emotional element and fun than investing in shares or fixed interest.