Aircraft and tax

[nig71]

without stirring up a hornets nest, what do you do with tax and aircraft as part of your business? I am a farmer wanting to purchase my first aircraft. What can I legitimately claim and how can it be structured? My accountant says I may be able to claim a portion of expenses and will probably have to keep a logbook. I want to use the aircraft to go to clearing sales and farm shows. Plus crop, stock and water inspection. They are correct in noting it would be just as practical to drive around my 5000acre property but I would also be wearing out a deductible vehicle doing that. Yes I am enjoying myself while I do it but I see no law against enjoying your job. Otherwise the taxation department would force us all to drive Ladas so we wouldn't enjoy what we are doing . Running costs in real terms would be similar to my dual cab which depreciates at $10k/year and return similar fuel costs.

 

 

[nickduncs84]

Opening a can of worms here, but in general, just because it's not a sound business decisions doesn't mean it's not deductible. If that were the case, corporate jets wouldn't exist! If you are using the aircraft for legitimate business purposes, there's no reason why the cost can't be deductible. Best speak to an accountant for your specific situation, but there are certain business purposes that I use my plane for and I always claim the wet hourly rate and have never had my accountant take issue with it. I'm sure you could be more aggressive with the depreciation, especially if it was majority business use.

 

 

[nashy]

NIG,

 

In my opinion, using a fixed wing plane to look at that size property is a waste of time and effort.

 

My brother in law has a property just a little larger than that and the best aircraft to do the job is a powered parachute.

 

They are slower and you can get right down low to do your inspections and you can cover most of the property in and hour or so.

 

I do it on a regular basis for him.

 

However they are no good for long cross country flights but purely for farm work they are the best.

 

 

[nig71]

I reckon you are probably right, with the exception of checking waters, would consider it a side benefit, the primary farm use would be travel for sale/field days. A Shute down where I am probably wouldn't go so great as our area is known for its wind. A STOL of some sort would be good for total farm use (Savannah maybe ) but speed is important at the moment. I have a friend who may sell a rv6 later in the year....

 

 

[Jaba-who]

Get an accountant with specific aviation tax experience.

 

The tax office changes the rules frequently and periodically takes aim at specific professions or users.

 

 

[Old Koreelah]

...I see no law against enjoying your job. Otherwise the taxation department would force us all to drive Ladas so we wouldn't enjoy what we are doing ...

.

Steady on there Nig! I always enjoyed driving my Lada!

 

 

[nig71]

Words...... Fail me

 

Wouldn't let me put emojis ....

 

 

[jetjr]

Aircraft are no different from any other asset you use to make a living and in fact have far less restrictions than motor vehicles

 

You just have to be able to prove it is audited, same as any other bit of kit

 

Accountants suggesting logbooks doesnt sound like he knows much about aircraft deductions. Required for cars not aircraft.

 

Watch out using RAA aircraft as your not supposed to use them for profit or reward......grey area

 

 

[rankamateur]

Just trying to work out how to get my Trimble Easysteer to work on my joystick. It would be a lot easier if it had a steering wheel!

 

 

[nig71]

Just trying to work out how to get my Trimble Easysteer to work on my joystick. It would be a lot easier if it had a steering wheel!

I think I see the problem; use john Deere autotrac :)

 

The only people more one eyed than john Deere lovers are those who hate john Deere ;)

 

 

[Jabiru Phil]

I asked my accountant this same question a few years back.

 

He said that it would be very hard to justify the business purchasing the aircraft

 

Instead, he suggested that I bill the business for any legitimate costs associated with this.

 

I.e hourly rate.

 

Never done it but guess it would be OK if logbook entry records the activity to be claimed.

 

PHIL.

 

 

[nig71]

Sounding like the most reasonable system at the moment, I assume because it is just a book entry and casa aren't worried if it is a homebuilt?

 

 

[facthunter]

I can't see the problem. The log book(other than the normal one) would get the proportion of Business hours to pleasure hours and you deduct a % of all costs. My wife used to be a regd. Tax agent. Accountancy qualified. this advice is worth what you paid for it. Power lines are inspected by fixed wing aircraft, so why not fences?

 

Don't use a low wing loaded plane in a windy area. How big is the property? Nev

 

 

[johnm]

Free and very cheap tax advice follows:

 

Unless you do a lot of hours - I'd go with the hourly rate, a comparable hourly rate if you had to hire the same plane from someone (long as you consider $ value / residual value of plane, no instructor wages etc)

 

Not really defensible charging $ 400 / hour for a 'flying flea' ...................... I wouldn't think

 

Not really defensible if plane costs you $ 15k per year to insure, house, fix and run and you only did 10 hours and 4 hours of that was business - Mr tax commissioner would take a very dim view of a deduction of 4 hours @ $ 1,500 = $ 6,000

 

(there would probably be an entirely different argument if the plane was 100 % business and owned 100 % by a business)

 

 

[Kyle Communications]

The only people more one eyed than john Deere lovers are those who hate john Deere ;)

Sounds like Collingwood or Manly supporters

 

 

[Nobody]

A homebuilt or owner maintained RAAus cant be used for hire and reward. I don't know if invoicing yourself thing would fall into this category but it might limit which aircraft you can choose to use. Perhaps a call to RAAus.

 

Talk to a good accountant. The better way is for the business to own the aircraft and you pay for the time you use it for personal use. That way the costs associated with maintaining currency and training are covered by the business.

 

 

[nig71]

Problems are compounded by the fact that we are not incorporated but a partnership. A seperate entity is more difficult to attain.

 

I suspect that it wouldn't be a problem for homebuilt aircraft as you are not flying for reward but your business is getting rewarded by your flying. If that were the case I would need a commercial license to fly to Perth for a business meeting.

 

An arbitrary figure for light plane hire dry ?

 

 

[Nobody]

There is a difference between flying commercially and "hire and reward". A flying school cant rent a home built to the holder of a PPL.

 

 

[johnm]

.................. OK, if I had a flying flea (a plane) - and I could fly to some place and back (with either a cost saving in time or even a cost saving in something that created an income (perhaps delivering something I owned)) ........... then that plane has derived (or helped derive) an income - so it must be fair game as a tax deduction ?

 

makes no difference if its got Qantas on the side or RAA numbers

 

 

[rankamateur]

The only people more one eyed than john Deere lovers are those who hate john Deere ;)

Loath them myself!

 

 

 

[kaz3g]

I asked my accountant this same question a few years back.He said that it would be very hard to justify the business purchasing the aircraft

Instead, he suggested that I bill the business for any legitimate costs associated with this.

 

I.e hourly rate.

 

Never done it but guess it would be OK if logbook entry records the activity to be claimed.

 

PHIL.

Aircraft on stations are generally just treated as another vehicle for tax purposes but for smaller properties and other business purposes where the use is a mixture of business and pleasure the hourly rate seems to be the way to go. I do this when I fly for work and I provide my accountant with details in the same log book as I record work vehicle mileage (taken from my pilots log book).

 

I did a conference in Alice Springs a couple of years ago and this year I'm going to one in Perth. I'll take in a few courts and legal centres as I go to compare the ways in which legal services are delivered in remote and regional areas. Today, I flew the short distance from Shepparton to Benalla and back again because there wasn't a spare work vehicle ... It was also my birthday! I'm currently charging the aircraft out to my tax at about $200 per hour and put 0.8 hours on the tachometer which equates to $160 for the journey. By road it's about 150km round trip or $120 vehicle claim at RACV rates and it takes 50 minutes each way so the costs in time and money are comparable.

 

Kaz

 

 

[ianboag]

Don't use a low wing loaded plane in a windy area. Nev

what the man REALLY wants is a gyro ..... reasonable (bit slow) X-country, magic for inspecting stuff and pretty much impervious to turbulence ...

 

 

[facthunter]

They certainly handle bumpy weather well. Bit thirsty and slow, but you can't have everything. Nev

 

 

[nig71]

All we really want is extreme STOL, 200knt cruise, on 16L/h Mogas, stall in the low 20s, handles turbulence easily coming in with a useful load of 400kg. Hmm I think I need two if not three aircraft.....

 

 

[rankamateur]

Hmm I think I need two if not three aircraft.....

Always easy to confuse your wants and your needs. The challenge is often convincing your spouse that you need your wants.