Watch.....a tax deduction??

[nomorecatering]

I understand that a chronomiter is an approved tax deduction for a pilot. Would the purchase of a Breitling watch satisfy the tax office as a work required time piece and allowable to be claimed as a tax deduction.

[ExcessData]

According to the 2003 ATO determination for 'Airline Employees' (NAT2331):

"You cannot claim a deduction for the cost of buying or maintaining timepieces as this is a private expense."

I was fairly surprised by that one, given many aviation watches perform multiple functions above and beyond timekeeping...

[compressor stall]

ED is on the money there.

It is NOT an allowable tax deduction. People have and will, but if they are audited....it's your risk.

It surprised me too as it is a mandatory instrument given many c210s etc have no functioning clock.

you MIGHT get around it if you brought the Brietling ELT watch, claiming it as an ELT.

There are many other deductions you can claim legitimately you might not have thought of yet. Read the rules carefully!

CS

[404 Titan]

nomorecatering

You will get different opinions from different accountants. As a general rule, (from someone that use to be an accountant 14 years ago) you should be able to at least claim a proportion of the purchase price of the watch. The proportioning is based on how much you use it for work and how much you use it for private use. If you can prove that it is only used for work, i.e. two or more watches then you may be able to claim 100%. Speak to an accountant that specializes in aviation tax. :)

[compressor stall]

But remember if an accountant tells you you can do it, it does not mean that it is legal to do so. The law is obscure and in some cases vague.

If you are audited, saying "XYZaccountants and sons told me it was OK" will not stand up against the ATO in court.

[404 Titan]

compressor stall

An ATO determination isn’t law. It is a ruling based on the facts as they know them. The ATO made a similar determination or ruling in the 80’s regarding aviation medicals. They argued in arbitration that it could be used for a private nature and therefore isn’t deductible. When it was pointed out to the ATO that the Aviation Medical was required to obtain assessable income their ruling changed. The same argument could be put regarding watches, sunglasses etc. i.e. watch required by law and glasses required to protect your eyesight so you can maintain a medical to earn assessable income. :8

[Ibol]

MMMMMM..

I think you'll find an accurate timepiece (h/m/sec) is an aircraft equipment requirement. It is regarded as part of the aircraft not as part of the pilots tools (headset / navbag).

As you are no doubt aware, for IFR ops, it's required to be an aircraft fixture. (In the dash) A watch will not suffice.

ATO won't come to the party on that one.

Nice watches tho.

Cheers Ibol

[404 Titan]

Ibol

A timepiece carried on the pilot is perfectly OK for VFR operations as specified in CAO 20.18 Appendix I. If it is a legal requirement then it is at least partly deductible. Speak with a good Tax Accountant and take in the CAO’s as a backup to your case. I am sure he or she will agree with me. If the ATO doesn’t like it contest their ruling. I have taken them to the Administrative Appeals Tribunal in the past and on each occasion beaten them. They aren’t always right. After all their job is to get as much tax out of you as they possibly can. Your job with a good account is to pay as little tax as possible, legally. I’m all for tax minimization as this is perfectly legal as apposed to Tax Avoidance which is illegal and needs to be stamped out, i.e. Bottom of the Harbour Tax Schemes.

APPENDIX I
INSTRUMENTS REQUIRED FOR FLIGHT UNDER VISUAL FLIGHT RULES
(Limited to aircraft specified in subsection 3 paragraph 3.1)

1 The flight and navigational instruments required for flights under the Visual
Flight Rules are:
(a) an airspeed indicating system;
(b) an altimeter, with a readily adjustable pressure datum setting scale
graduated in millibars;
(c) (i) a direct reading magnetic compass; or
(ii) a remote indicating compass and a standby direct reading magnetic compass; and
(d) an accurate timepiece indicating the time in hours, minutes and seconds.
This may be carried on the person of the pilot or navigator.

2 In addition to the instruments required under paragraph 1, aircraft, other than
helicopters, engaged in charter or aerial work operations and operating under
the Visual Flight Rules, shall be equipped with:
(a) a turn and slip indicator; (agricultural aeroplanes may be equipped with a
slip indicator only) and
(b) an outside air temperature indicator when operating from an aerodrome at
which ambient air temperature is not available from ground-based
instruments.
:)

[Ibol]

404. Thanks for your reply. I note your point regarding challenging ATO on this issue.

My reference is the 2003 Aus & Intl. pilot Assoc Income tax guide.
It states quite clearly this is an expense you cannot claim. But in respect to your comments I understand this is a guide only, and consultation with your accountant for tax minimisation is well and truly the go!

BUT..... the point I make is a time piece is an AIRCRAFT equipment requirement. Not a PILOT equipment requirement. If the aircraft is fitted with an accurate clock, you don't need a watch. And if you don't need a watch, YOU CAN'T CLAIM A WATCH!

NOW

BIK.....

Please excuse my horrible generalisation! You are sooooo right.
CAO 20.18 Appendix IV (1) (d) states you can wear the bloody thing on your wrist.

However... this is for private IFR and freight only charter.

Want to carry pax IFR? Then it's NO WATCH!!!!!!!!!!!!!!

Look (as you seem so keen to) at CAO 20.18 Appendix III (d).
This is the reference for carrying passengers under IFR charter.
There is no ommision of the accurate timepiece if worn by pilot or navigator. IT GOES IN THE DASH!

So excuuuuuuuse me for wildly throwing LIES (as you call it) around. I will be more specific in future. I carry passengers IFR for money. That's what I do. So My watch doesn't count as minimum equipment. Aircraft already has one. So I don't need one. So I can't claim one. GET IT???

:}

[Ibol]

CAO 20.18 Appendix III (d).


Where in this C.A.S.A reference does it state an accurate timepiece may be ommited if worn on the wrist.

I am being specific this time. I refer to IFR passenger charter.

Where Where Where????

To answer your question...THE CAO's is where I get my info.

Read it! Read it! Read it again! And read it properly this time.

[Ibol]

ooooohh OK. Yes. Fine. :hmm:

Are you a lawyer or just bored?

[Boomerang]

Hehehe nice one BIK.

Now, what about one of those strap one wristwatch size wizz wheels that also tell time. I think I need one for navigating and in-flight calculations, will that be deductible? ;)

[Torres]

I shouldn't buy in here, but........ I really don't think a deduction for a watch is going to be very significant!

I would think that if the CAO's require the use of a personal watch by the pilot in certain categories of flight, the ATO would be hard pressed to deny a deduction in relation to that watch. Note that the reference to a watch in CAO 20.18 above, relates to a requirement for the watch to be carried on the person of the pilot or navigator, in certain categories of flight. The CAO does not mandate the fitment of a clock as an integral part of the aircraft in those same certain categories of flight.

Assuming you can persuade the ATO to accept a personal tax deduction, the next questions relate to whether or not it is a capital purchase and the percentage of cost as a deduction:

If it is a capital purchase, the capital value may well be capped, in the same manner vehicle capital costs are capped for tax deduction purposes (I forget the maximum value, but think it is around $50,000 - you can't claim the full value of a Rolls Royce for tax purposes). There goes your expensive Brietling if the ATO decides a $50 watch is all you need.

If the ATO deems the watch is a capital purchase, you will only claim depreciation each year, not the full value in the year of purchase.

If you wear the $5,000 Brietling watch full time but only require it for (say) 600 flight hours per year (of 8,760 hours pa), you could only claim 6.85% of the depreciation.

So..... $50 watch, depreciated over 5 years (20% pa) = $10 per annum

$10 per annum depreciation at 6.85% = $0.685 per annum.

Is it really worth the effort for a 68 cents tax deduction???

[Capt Claret]

one purchases a Citizen Navigational Computer, whiz wheel and all, and the tax invoice says Navigation Computer, and it just happens to have inside the navigation computer, analogue clock hands and digital time displays? ;) ;)

[Torres]

............then you probably wouldn't tell the Taxman about the clock bits?

Same could be said of a lap top computer for work.

Tax deductable!

[Airspeed Ambassador]

Seems pretty clear from this ATO document that watches are not claimable.

ATO Website (http://www.ato.gov.au/content/downloads/NAT2331-03.pdf)

AA

[404 Titan]

Airspeed Ambassador

Please read what I have said before. A ruling by the ATO isn’t binding in law. It is an interpretation of what is allowed under “NORMAL” circumstances. As an accountant in my former life I can assure you that under certain circumstances it is at least partly deductible. Get a good accountant that specializes in Aviation Tax and take in the CAO’s and your logbook to back up your case. If the ATO doesn’t like it contest their ruling to the Administrative Appeals Tribunal. I have done this on several occasions and beaten them each time. Under no circumstances should we as taxpayers take an ATO ruling as gospel. They are trying to get as much tax out of you as they possibly can. You should be trying to pay as little as you possibly can, legally.
:ok:

[Ibol]

Torres,

Note that the reference to a watch in CAO 20.18 above, relates to a requirement for the watch to be carried on the person of the pilot or navigator, in certain categories of flight. The CAO does not mandate the fitment of a clock as an integral part of the aircraft in those same certain categories of flight.

NO.....wrong. CAO 20.18 states that in certain categories of flight a clock (mounted as an integral part of the aircraft - to use your words) may be OMITTED if worn on the wrist by the pilot / navigator.

IT IS NOT A REQUIREMENT TO BE WORN ON THE WRIST.

[404 Titan]

Ibol

WRONG

It doesn’t say that at all. It says for VFR operations quote:
(d) an accurate timepiece indicating the time in hours, minutes and seconds.This may be carried on the person of the pilot or navigator.
No wear does it say, quote:
CAO 20.18 states that in certain categories of flight a clock mounted as an integral part of the aircraft may be OMITTED if worn on the wrist by the pilot / navigator.
I think you are trying to make what is a very simple requirement complicated. All CAO 20.18 Appendix I is saying in very simple language is that the time piece must be in the aircraft or on the pilot/navigator. Now if the aircraft doesn’t have a clock and there isn’t a dedicated “navigator” on board, then the pilot must wear a watch that reads hours, minutes and seconds. It's that simple.
:rolleyes:

[Torres]

And all I was trying to point out is that even if the ATO accept a watch as a tax deduction, they aren't going to accept a $5,000 gold wristwatch!!! :{

I don't even care whether or not you need a watch! I don't even own one! :ugh:

[404 Titan]

Torres

Agree. You would be very hard pressed trying to convince the ATO of a $5000.00 deduction for a watch when a $100.00 Citizen or Seiko will do the same job.
:)

[Ibol]

Mr 404,

No wear does it say, quote:

CAO 20.18 states that in certain categories of flight a clock mounted as an integral part of the aircraft may be OMITTED if worn on the wrist by the pilot / navigator.

Actually it does in appendix IV (d).
So bite me.
And read ALL of the reference before you come back posting what you think[/L] it might say or not say.

However your last paragraph:

simple language is that the time piece must be in the aircraft or on the pilot/navigator. Now if the aircraft doesn’t have a clock and there isn’t a dedicated “navigator” on board, then the pilot must wear a watch that reads hours, minutes and seconds. It's that simple

Is very true!

But ... as you quite simply pointed out. It [I]may be in the aircraft or it may be on your wrist. IT IS NOT A REQUIREMENT FOR IT TO BE ON YOUR WRIST AS TORRES STATED.

This was my objection.

And as we've rehashed before... for IFR passenger carrying charter operations and RPT operations(appendix II & III) It does not state any provision for this timepiece to be worn on the wrist. And seeing as CAO 20.18 is headed up as Aircraft Equipment - Basic Operational Requirements , one would conclude that as you can't be worn on your wrist......... It's fixed to the aircraft.

Hence if it's aircraft equipment, it's not pilot equipment.

The only way I can figure you can claim your watch is if you are the owner of the aircraft. The aircraft is not equippedwith a timepiece. You operate it under a suitable CAO 20.18 appendix allowing the timepiece to be worn on the wrist (I & IV), and you are depreciating your wristwatch as part of the aircraft equipment along with the rest of the avionics.

[Torres]

Ibol

The thread topic is:

Watch.....a tax deduction??

The only point I wanted to make, which is totally relevent to the topic, is that the ATO are not going to grant a tax deduction on a $5,000 diamond encrusted gold watch, no matter whether you wear it on your wrist, have it in your pocket, attached to the aircraft, strapped to your little toe - or rammed up your hooter valve!

Debate over the CAO's is totally irrelevent to the thread topic, when you and I both know a watch is a "tool of trade" for any pilot.

God ... I hate Fridays!!!!! :{

[404 Titan]

Ibol

I have never made a single reference to CAO 20.18 Appendix IV. I have only ever made reference to Appendix I. In which case all my comments stand as factual. All I was trying to show you and others was that there is a legal loophole to claiming a deduction for a watch. Probably not a Breitling but definitely a Citizen or a Seiko. I’m sorry but your assertion that a watch carried by the pilot under Appendix I & IV is part of the aircraft equipment is totally irrelevant to this debate and wrong. The Oxford Dictionary and American Heritage Dictionary definition of “Omitted” is (To fail to include or mention; leave out). Therefore if we replace “Omitted” with “Left Out” in Appendix IV, we get:
(d) an accurate timepiece indicating the time in hours, minutes and seconds, except that this may be “Left Out” if it is carried on the person of the pilot or navigator;
It is saying very simply, (because that is all you seem to understand), that if we “leave out” the Clock from the aircrafts equipment it is OK to operate as long as the pilot has a personal timepiece on him. In both Appendix I & IV if the aircraft isn’t fitted with a clock or it isn’t working, in which case it must be placarded so in the Flight Manual and the aircraft as unserviceable, then the pilot must have a timepiece on him (whether it be on his wrist, in his pocket or up his *******) as Torres so eloquently put it. Now Ibol, you are detracting from what this debate is all about, “Tax Deduction for a watch” with your immature, pedantic drivel. Grow Up. End of lecture.:yuk: :*

[Ibol]

Glad to BIK... :ok: ....Glad to.