Time is Money: Can You Claim Your Watch or Smartwatch in your Business?

Navigating tax deductions can be complex, especially when it comes to items like watches and smartwatches. Understanding what the Australian Taxation Office (ATO) allows can help you make informed decisions and ensure compliance.

General Rule: Personal vs. Work-Related Use

Typically, the ATO considers the purchase of watches and smartwatches as personal expenses, making them non-deductible. However, exceptions exist when these devices are essential for performing specific work-related duties.

Traditional Watches

Standard wristwatches are generally viewed as personal items. But, if a watch possesses unique features necessary for your job, it may qualify for a deduction.

Example: A nurse purchases a fob watch due to hygiene protocols that prohibit wristwatches. Since the fob watch is essential for their role, its cost is deductible.

Smartwatches

Smartwatches are usually deemed private expenses. To claim a deduction, you must demonstrate that the device's functions are integral to your work duties. Maintaining records of work-related usage is crucial, through completion of a diary or similar record.

Example: A Personal Trainer monitors clients' fitness metrics during sessions. The employer provides the Personal Trainer with a device and a program for recording these details, however it doesn't allow the Personal Trainer to check his messages while he is working, so he buys a smart watch. The smart watch delivers both personal and work related messages. The Personal Trainer cannot claim a deduction for the smart watch because his employer provided him with the necessary tools to do the work.

Claiming Deductions

If eligible, you can claim deductions for:

• Purchase cost

• Maintenance and repairs

• Battery replacements

For devices costing over $300, deductions should be claimed based on the decline in value over the device's effective life, adjusted for any personal use.

Example: A police diver uses a specialized diving watch for both professional and recreational purposes. They can claim a deduction for the watch's depreciation, proportionate to its work-related use.

Key Takeaways

• Deductions for watches and smartwatches are generally limited to situations where the device is essential for work.

• Maintain thorough records to substantiate the work-related use of the device.

• For high-cost items, calculate deductions based on depreciation, considering both work and personal use.

  
  

Always consult with a tax professional or refer to the latest ATO guidelines to ensure compliance and maximize your eligible deductions.