Publication 40, Watercraft Industry
Sales of Watercraft Parts, Materials, and Supplies
This section is a general guide to the application of tax to sales and purchases of watercraft parts, materials, and supplies. Generally, sales and purchases of these items are subject to tax. However, as with sales and purchases of watercraft, some special exemptions apply. If you have questions regarding the taxability of a particular item or transaction, you may contact our Customer Service Center for assistance at 1-800-400-7115 (TTY:711).
Component parts of tax-exempt watercraft
Sales of component parts of a watercraft are not taxable if the parts are an integral part of a vessel that is exempt from tax based on its principal use (as described in the first section, Tax-Exempt Watercraft). They must become part of the vessel as it is constructed, repaired, cleaned, altered, or improved. Component parts must be:
- Substantially affixed or attached to the exempt watercraft while in use; or
- An affixed part of the vessel.
In addition, property normally treated as an expense item for accounting purposes, and not substantially affixed or attached while in use, is not considered to be a component part. Sales of these items are also taxable.
If you are a seller of watercraft parts, you must obtain a watercraft exemption certificate from all purchasers who buy qualifying component parts for an exempt vessel; otherwise, you are liable for sales tax on the transaction.
You must clearly separate taxable and nontaxable items on sales documents, including, but not limited to, invoices, contracts, and purchase orders. You may wish to clearly mark each nontaxable item listed on your sales document in a way that refers to the watercraft exemption certificate on file. For example, you may identify each tax-exempt item with an asterisk (*) and write the following on your sales document: "All items marked with an asterisk (*) are exempt from sales or use tax per Watercraft Exemption Certificate dated _."
For a listing of component parts that may be nontaxable, see the Appendix: Component Parts and Taxable Items for Exempt Watercraft. For additional information, please see Regulation 1594, Watercraft.
Fishing equipment
Sales of fishing nets normally attached to a tax-exempt vessel when in use, and items that become part of the nets or are attached to them, are generally tax-exempt. These fishing nets and parts are considered to be component parts. Sales of nets that are set out on buoys or floats, and their parts, are taxable. Examples of taxable and nontaxable fishing equipment can be found in the Appendix: Component Parts and Taxable Items for Exempt Watercraft.
Similar types of fishing gear may be classified as nontaxable in one situation and taxable in another, depending on their use or the way in which they are attached.
Navigational charts
Sales of hydrographic charts printed by the U.S. government are not subject to tax. Sales of coast and geodetic charts, however, are taxable.
Repair supplies, parts, and materials
Sales of watercraft repair and refinishing supplies to ship and boat repairers are subject to tax. Examples include sandpaper, rags, paint thinners, solvents, paintbrushes, and pails. Sellers of these supplies should not accept a resale certificate or watercraft exemption certificate for the taxable items. The sale of paint to repairers is also taxable, unless the paint will be applied to exempt watercraft.
Boat repairers’ sales of repair parts or materials are subject to tax if:
- The retail value of the parts is more than 10 percent of the total repair charge. When this occurs, parts and materials charges must be stated separately from repair labor or installation charges on repair invoices; or
- Separate charges are made for repair parts and materials, regardless of the value of the parts.
Repairs to exempt watercraft
Sales of repair parts or materials that become component parts of exempt watercraft are exempt from sales tax. A watercraft exemption certificate should be provided to retailers when purchasing these component parts.
Trailers
You must register for a Tire Fee account if you are a California retailer that sells new tires. The fee is imposed upon the retail purchase of a new tire. Tires that are subject to the fee include new tires sold separately from, or included with, the retail purchase of new or used motor vehicles, including trailers. The fee is $1.75 per tire. You can keep one and a half (1.5) percent of the fees you collect as a reimbursement for your related costs. For more information, see publication 91, California Tire Fee, or contact our Customer Service Center at 1-800-400-7115 (TTY:711).
Revision July 2026