If you’re a taxpayer who is wondering whether you can claim a deduction for the cost of a watch, the answer is not always clear-cut. Here’s what you need to know about claiming deductions for watches, including ordinary watches, smart watches, and watches with special characteristics.
First of all, it’s important to understand generally that the cost of buying or maintaining a watch is considered a private expense, and usually you cannot claim a deduction for this type of expense.
However, there are some exceptions to this rule. If your watch has special characteristics that you use for a work-related purpose, such as a nurse’s fob watch, you may be able to claim a deduction for it.
When it comes to smart watches, the rules are similar to those for ordinary watches. In general, a smart watch is considered a private expense and not deductible. However, if you require some of the smart watch’s functions as an essential part of your employment activities, you may be able to claim a deduction for it.
To show the work-related use of the watch, you will need to keep a diary or similar record of your use of the watch for a representative period (e.g. a normal working fortnight).
Depreciation or deduction?
Additionally, depending on how much your watch costs and whether you are an employee or running a business, you also need to be aware that instead of a deduction for the watch, you may only be able to claim a deduction for part of the cost each year, that is, the decline in value over its effective life (depreciation).
In conclusion, the cost of buying or maintaining a watch is generally considered a private expense, and you cannot claim a deduction for it. However, there are some exceptions to this rule, such as for watches with special characteristics or for the work-related use of a smart watch.
To determine whether you can claim a deduction for the cost of a watch, it’s important to consider your specific circumstances and consult with a tax professional if necessary.