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Latest Article - What to do with Tips
Pete
Posted: Wednesday, August 4, 2010 10:59 AM
Joined: 01/12/2008
Posts: 52


Please see my latest 'Its Your Money' Article on page 80 of the August edition.

Wondering What To Do With End-of-Season Tips?

MANY YACHT CREW ARE LUCKY enough to end the season with some healthy tips…in cash! Is there anything that can be done with these to prevent you from having to walk around with a bundle of notes or from stowing it under your mattress?

Bank it or invest it?
Due to strict anti-money laundering (AML) legislation, investing or saving cash is now very difficult to administrate. You now have to prove where you got the cash from (a letter from your captain may suffice), but many banks now are reluctant to accept a large deposit in this manner.

Most crew bank with offshore centers so they simply can’t walk into their local branch, although it may be possible to get a banker’s draft from another bank (at a cost) and send this to the offshore bank by post.

Also, the receipt of cash as payment could be viewed by authorities as tax evasion, which is a serious offense and so thought must be given to deciding whether to receive any payment in cash at all. In addition, having cash has other downsides, such as not being able to take advantage of the plethora of online discounts for goods and services, where you would pay with a card, or having the benefit of additional card services for your purchases,
such as insurance.

So what are the alternatives? Get paid tips as a salary top-up – more and more yachts now are receiving charter tips as part of the account when the charter is booked. This means that after the charter, the guests can allow these funds to be released to the crew, which then can be paid directly into the bank account and declared accordingly.
If the captain does receive cash as a tip, many now keep this as part of the yacht’s running cash requirement and then distribute the tips to the crew from the yacht’s bank account – this is a sensible way to manage the accounts and some strongly believe that it will become the normal practice over time. Chat to the captain or purser if you want to go down this route...also ask at the interview stage about the normal treatment of tips.

Spend it. On balance it’s probably best to not ever receive cash in the first place, if this can be arranged with the yacht. If it’s unavoidable, then consider spending the cash at the end of the season and get into the habit of saving or investing more of your salary during the charter season. Many investment accounts will accept relatively small lump sums on an ad hoc basis when funds have built up in your bank account.

Remember, if you’re tax resident in any country, your tips MUST be declared as part of your income, whether you receive them as cash or via a bank transfer.

 
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