Getting away from glide speed

[Guest Redair]

Greetings each, time for one of those taxing questions, or more accurately a question of tax. How much, (if any) of an ultralight's value/running costs could legitimately be claimed back against tax in any of the following examples:

 

1. The aircraft is used as a platfom for photography and video making, (given that it is merely a high altitude tripod, and therefore does not actually generate any direct income, as any income would be purely from the sale of pictures and video. In other words, non commercial use).

 

2. The aircraft is used to check on stock and crops, and while the farmer would employ me as a farm-hand to carry out this kind of work, the use of an aircraft would not be a seperatley charged item, merely a means of doing a job more easily. (Also, I understand that certain Agricultural work does not come under the heading of comercial use, is this correct?)

 

3. The aircraft is hired to a flying school. Major one this, as surely this would indeed constitute hire/reward use, and then we are back into the whole commercial operations thing again.

 

Any thoughts would be most welcome, and no, at present I do not do any of the above.

 

Redair.

 

 

[Deskpilot]

Don't RAAus rules state 'recreation only'. This, in my humble opinion, would preclude any aerial photography for profit usage. If you did try to obtain a tax return/reduction, you could end up losing your license, me thinks.

 

Cheers, Doug

 

 

[Guest pelorus32]

As I understand it if you use an RA aircraft in the pursuit of your business then you may be able to claim reasonable deductions. Note that what I am talking about is someone who has a shop in Timbuktoo and another one in the Back of Burke and uses the aircraft to travel between them in the course of conducting the business.

 

That as I understand it is quite different to advertising that you will take people for scenic flights in the aircraft.

 

The same applies to aircraft being put on line. Flight training by FTFs with qualified instructors is allowed. You are allowed to put your a/c on line and charge the FTF for it. That means it seems to me that you have a case to argue for a tax deduction.

 

However: You should discuss this with an accountant as what's claimable and what's not is a problematic area - just ask the boating industry.

 

The distinction I was trying to make is that I think there are perfectly valid circumstances where an a/c may well give rise to a tax deduction without breaching the "hire and reward" rules. Whether you can actually persuade the ATO to allow the deduction is quite another thing.

 

Regards

 

Mike

 

 

[facthunter]

Topic.

 

Fella's & gals, this should have been a new thread. It's a totally different topic.Let's keep a bit of order.... Nev.

 

 

[Deskpilot]

Facthunter my ol' friend, I hate it when topics get sidelined as well. Now, what was the initial question, something about offsetting aircraft costs by using it for business. I thought both of the previous posts addressed just that.

 

Cheers, Doug

 

 

[facthunter]

Clarity.

 

The "getting away from glide speed" seems to be a misnomer. In the interests of clarity, couldn't something more indicative of the subject be the thread starter? You see, I thought I was going to learn the art of getting away from glide speed, and I find it's all about money, instead.. N....

 

 

[Deskpilot]

Must admit, I couldn't see the link either

 

 

[Guest Redair]

Oh dear, seems I've confused some of you. The whole point of calling it, "Getting away from glide speed" was to announce that it was exactly that, i.e. getting away from that subject. As for it being a separate thread, well it was, I didn't add it into the glide speed debate, and since there were evidently so many of you tied up in that thread, (it being at the top of the list when I made my posting) I thought I would point out that there was another subject to be delved into, and one which I hoped would get me some sound advice from the learned members of this community. Please understand that I am still a relative newcomer to this site, and ultralight aviation, and am merely trying to gain knowledge, before embarking on a chosen plan. I do not own a photography business, but was only trying to find out, (as with the other examples) as to what is or is not permissible. Having said that, photography is a hobby of mine and as such, an aircraft would give me more opertunities to take pictures of things that might otherwise not be available to me.

 

Thanks to those that did start to shed some light on the matter.

 

Regards, Redair.

 

 

[Guest Redair]

No it isn't

 

I find it's all about money, instead.. N....

Not at all about money, more about making sure that anything I might do does NOT break the rules.

 

Redair.

 

 

[facthunter]

Meaning.?

 

Redair, YOU think you're in trouble...... Everytime I try to be a bit humorous I end up being misunderstood. I tell you, after a while it's enough to make me give up and put an end to it.( trying to be subtle & funny that is.) Are you sure you havent done an advertising course somewhere in the past? You have a distinct talent. Cheers Nev.

 

 

[Guest TOSGcentral]

Redair. If this is of any help….

 

Pelorous has got most of it in his post above but here is a different expression.

 

The key factor is Hire and Reward! If you deliberately set out to use an ultralight as a function of getting financial reward then it is a commercial enterprise and it is not allowed.

 

For example: You can go take as many photos as you like from your ultralight. If you got a good one you could probably sell it to a local newspaper just as you may a pic of your kids or a flower or whatever. Nobody is likely to be bothered.

 

If you deliberately bang on the local real estate agent’s door and set up a deal to do aerial photography of his listings for a fee then that is deliberate commercial use of an ultralight and is not allowed.

 

A bit more blatant perhaps…. Once efforts were made to turn Thrusters into crop sprayers and this was squashed very promptly. Yet I have a copy of a letter from a recent Minister for Transport that you can crop spray with ultralights – on your own property! Go over the fence and charge the neighbour and it is a different ball game and you will certainly be in court, if not worse!

 

Hang out a sign advertising joy rides for a fee and you are in trouble. But you can fly virtually anyone you want and get some payment on a “costs shared†basis – providing what you are doing is not a business – in fact or demonstrably de-facto!

 

Using your ultralight to get about your business as a means of transport is just that – a means of transport – and you can legitimately claim that on tax just as you can your car, its servicing etc. The aircraft is enabling you to conduct your business but is not the means for you to make income – just access the means of making income. If you had to take the airlines to go somewhere to transact business would you not consider that a legitimate business expense? You are paying yourself for the aircraft and its operation just as you would pay for your airline ticket, the taxi to the airport etc.

 

There are so many shades of grey and these are pushed by people skating on very thin ice indeed to make a buck. Just as there are plenty of people skating on thin ice by cowboy antics in ultralights that give the rest of us a bad name.

 

The only legal commercial use you can make of an ultralight is flying training at an RAAus school with all that entails in compliance with RAAus requirements.

 

PS – I am in agreement with Facthunter – your thread title was misleading and you would have got far more responses and feedback with something like “Taxation and Ultralightsâ€Â.

 

Aye

 

Tony

 

 

[Guest Redair]

Thank you, that has been a great help. Most likely these situations will not arise, (apart from the photography one) but it will help towards trying to choose what aircraft to buy and whether or not to get involved in the whole complicated tax issue. I'm not desperate to claw back every penny I can, but there's no point wasting the hard-earned if you don't have to. Tax offsets would be a benefit not a reason for flying.

 

I still have to decide whether or not I would want to let my pride and joy, (whatever it might be) be used by a flying school, (assuming all requirements for that are met) now that would be done to help offset the cost of the aircraft, not tax.

 

Regards, Redair.

 

 

[hihosland]

Whilst "putting it on line with the flying school" is regular practice in the GA community the regulations governing RAAus aircraft would seem to make that practice challenging to implement while also complying with the no hire or reward requirements.

 

If you put it on line with a RAA school at a rate greater than a equitable cost sharing then I am sure that some authority would argue that practice in breech of the regulations.

 

If you put it on line at a break even cost sharing arrangement, what happens when the aircraft is bent whilst being used for training? Who pays?

 

Very murky waters.

 

Davidh

 

 

[youngmic]

The Tax Man

 

I suspect this matter has similarities to prostitution, and the tax man wants his share of a prostitutes income.

 

As I understand the tax man doesn't really care how you earned a dollar as long as you pay the applicable tax that it incurs.

 

It then follows that if you declared the money earned as income and payed the tax, then deductions associated with the cost of earning that income are entitled.

 

Just like a prostitute you would need to apportion the deductions based on what was business use and private use.

 

Mick

 

 

[Guest Redair]

Exactly

 

If you put it on line at a break even cost sharing arrangement, what happens when the aircraft is bent whilst being used for training? Who pays?

Very murky waters.

 

Davidh

Exactly, but then there are those that manage to do it. I am looking for an easy life in general, which is why I ask these seemingly daft questions... I like to get as many facts together as I can before making any decisions. Thanks for the input.

 

Regards, Redair.

 

 

[Guest Redair]

Wow

 

I suspect this matter has similarities to prostitution, and the tax man wants his share of a prostitutes income. As I understand the tax man doesn't really care how you earned a dollar as long as you pay the applicable tax that it incurs.

 

It then follows that if you declared the money earned as income and payed the tax, then deductions associated with the cost of earning that income are entitled.

 

Just like a prostitute you would need to apportion the deductions based on what was business use and private use.

 

Mick

Now there's an idea! Sod photography, all I would need is a red light and away I go! This service would surely outdo the flying doctor! Only thing is, I'm not too sure about these abbortion deductions of which you speak, but thanks for viewing me in this light... I mean, if YOU can see my potential, then getting customers/clients, whatever they are called, should be no trouble!

 

Redair, or should that be Red-Light-Air?

 

Oh, and I"m claiming copyright on that business name before anyone else thinks about pulling the rug from under my feet.

 

 

[youngmic]

I understand there is an operator somewhere in Oz already offering these flights.

 

The CASA shut down an operator years ago due to not being able to have the pax seated and strapped in during T/O and landing.

 

This sought of revenue flying is probably best left to heavier GA types, the frantic coupling of a couple of heavy weights in a light RA type would probably result in a flick roll and longevach.

 

Mick

 

 

[Guest TOSGcentral]

OK – I will expand a little further.

 

In the hire to a school situation you are in no different a boat to if you were hiring cars, plant, boats or trailers to a commercial enterprise to use – you are not yourself flying the aircraft for hire and reward.

 

But in business and personal terms, I would exercise extreme caution, sharpen your pencil and know exactly what you are doing!

 

I have given this advice many times before and it is very sound advice based on personal experience. You need a cast iron contract that is enforceable under law without it costing you all your free cash or mortgaging your assets to proceed with and then find the other party either has nothing or is in some kind of family trust situation – or as in my case – everything I have is in my wife’s name, and you cannot get at them.

 

You need cast iron assurance that the aircraft is kept insured and you must stop its use if the insurance is allowed to lapse – just getting insurance can be a trick, is expensive, and some operators run “at risk†to lower their hire out charges to be competitive.

 

It is not simply how a deal is set up initially but how it is subsequently maintained and how much the owner has the ability of overseeing what then happens with adequate escape clauses.

 

Flying schools wear out aircraft fast! If nothing else you will rapidly be facing a major engine change. The actual depreciation on the aircraft and eventual condition of the aircraft can be that extreme that it is only worth considering as a hire venture and preferably as a straight tax loss situation where you care little about the aircraft itself – just getting income from hiring it and then dispose of it. Hiring it to off-set your cost of owning a nice aircraft does not really come into the equation when you analyse the situation.

 

I recommend that you only get into this situation if you are fully prepared to accept getting back a wreck or a very significant renovation and repair bill.

 

Personally, after over 40 years in grass roots aviation, I would not hire an aircraft to a school in a fit – and equally, when I operated flying schools myself I would enter into no cross hire agreements even if it did give me a better fleet. There are just too many potential hassles for both sides.

 

I am sure there are many out there who had, or are having, more pleasant experiences than what I have seen happen to friends and acquaintances, but I operate on what I know. One of my advantages is that I am capable of going through a flying school and analysing it top to bottom. That includes management structure, maintenance procedures, staff currency and advancement procedures, detailed theory and in-flight analysis of instructional staff and their capabilities and actual attitudes to their work.

 

How are you fixed for doing that or are you going to believe somebody on the strength of them waving just an endorsed pilot certificate under your nose?

 

Despite all that I can do, I would still not go there! These have been just personal views but I can only pass on what I know, believe in and have experience of. They are also harsh words and will be offensive to some. Tough – it is your aircraft and money, not mine!

 

Tony

 

 

[facthunter]

Advice.

 

In my humble opinion , you are lucky to get this sort of advice for free. N....

 

 

[Guest pelorus32]

Whilst "putting it on line with the flying school" is regular practice in the GA community the regulations governing RAAus aircraft would seem to make that practice challenging to implement while also complying with the no hire or reward requirements.If you put it on line with a RAA school at a rate greater than a equitable cost sharing then I am sure that some authority would argue that practice in breech of the regulations.

 

If you put it on line at a break even cost sharing arrangement, what happens when the aircraft is bent whilst being used for training? Who pays?

 

Very murky waters.

 

Davidh

I think that we need to apply clarity to the thinking here. The core issue is the use to which you put your pilot certificate, and therefore the a/c which you are driving when you are utilising your pilot certificate.

 

Lets say you don't have a pilot certificate but you want to buy three a/c and put them on line at a FTF. You can do that at any rate that you and the FTF agree is reasonable. The use for hire and reward is not you but the FTF and they are allowed to do that. Now let's change the situation slightly - you have a Pilot Certificate and the three a/c. Nothing has changed with respect to putting them on line. Because it is the FTF that is using them for hire and reward - the flying bit - not you.

 

Regards

 

Mike

 

 

[Bigglesworth]

Depending on your plane manufacturer this is known to work and I think I will eventually do it. Get a letter from then saying you are an agent, most of your flights are to visit potential customers, especially fly-ins, and no worries with commercial use.

 

Then accomodation at your destination is also deductable, and the business 'lunch' at the pilots bar, etc. etc.

 

 

[Guest Redair]

Thanks again to all. It has certainly opened my eyes to the potential pit-falls. Looks like I will now be concentrating purely on the recreational side of ultralighting... but hey, if you don't ask, you never know! It's the candid insight from those that have been there and done it, that will hopefully save me from making any bad choices. Thanks again, Redair.