Watch.....a tax deduction??
Watch.....a tax deduction??
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.
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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...
"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...
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
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
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.
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.
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.
If you are audited, saying "XYZaccountants and sons told me it was OK" will not stand up against the ATO in court.
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.
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.
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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
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
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.
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.
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I think you're missing my point
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???
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???
Last edited by Woomera; 8th Oct 2003 at 12:31.
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READ THE RULES!!!!
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.
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.
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?
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?
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???
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???
Last edited by Torres; 8th Oct 2003 at 12:27.
Bottums Up
What if ...
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?
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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.
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.
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Torres,
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.
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.
IT IS NOT A REQUIREMENT TO BE WORN ON THE WRIST.
Ibol
WRONG
It doesn’t say that at all. It says for VFR operations quote:
No wear does it say, quote:
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.
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.
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.
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!
I don't even care whether or not you need a watch! I don't even own one!