Can drones help reduce your tax?
The ever-increasing use of drones in commercial applications is now seeing industries look beyond the application advantages and examine the tax implications and indeed tax opportunities of drone leasing and drone ownership.
The good news is that as a functioning business tool, drones attract the same tax advantages as other capital purchases or operating leases.
In this article, we will look at the tax treatment of both options and identify some leading commercial drones that are not only professional and affordable, but also enjoy a favourable tax status.
Purchase versus lease. The choice is yours
One reason organisations choose to lease rather than purchase drone technology is as a ‘hedge’ against ownership risk. With rapidly changing drone technology and the inherent risks of time and technologically sensitive drone equipment, leasing can provide a more viable and risk-mitigated alternative to direct ownership.
This said, drone leasing advantages typically relate to cash flow benefits.
- Less ‘up front’ costs: While not totally cash-free as you still need make lease payments each month - from a cash flow perspective, leasing your drone means you will be making lease payments from future cash flows— in other words, from revenues you earn because of the drone use!
- Obsolescence: A key advantage in rapidly changing drone technology is being able avoid technology obsolescence. Leasing allows you to replace your drone equipment so it never becomes obsolete.
- Flexibility: Unlike outright purchase, a lease can be established for just a few months or the entire (expected) life of the drone.
- Tax advantages: Perhaps most important and when properly established, operating lease costs are fully tax deductible giving the operator a considerable tax windfall over the term of the lease.
In addition to these tax benefits, lease payments also reduce taxable income and in a more efficient manner than depreciation (which is typical of an outright purchase).
Finally, you can treat operating leases like rentals by expensing the entire lease payment when the business makes it!
Of course, leasing doesn’t suit all needs or preferences. Outright purchase is often a better option for those that need to use up capital. It provides 100 percent ownership and allows for unfettered use of your drone equipment – no leasing rules and regulations!
From a taxation point-of-view, purchase also allows you to depreciate the cost of the collective drone equipment – from drone to software - over a given number of years. For many organisations, this is a much more controlled and tax effective way to get engaged with drone technology.
Whichever way you choose to get your birds in the air, drones can now be viewed as an essential business tool so if you are a legitimate business venture, you can now enjoy all the taxation benefits that come from them.
Let’s look at some drone technology that will suit both your application and taxation needs.
Drone solutions with tax advantages
Listed below is our carefully considered selection of cost-effective, yet particularly able drone solutions for applications from aerial imagery and aerial inspections to multi-industry data collection. Field tested, reliable and rugged, each is also commercially compliant so you can enjoy all the tax-saving benefits!
Small, nimble and cost effective, the DJI Mavic Pro is a powerful drone and ideal for commercial photographers or videographers. Despite its size, it has a high degree of complexity that makes it a very sophisticated flying camera. If you are currently in, or establishing yourself in the photography or video field, this drone will not only meet your needs, but is commercially compliant to help you enjoy appropriate tax benefits.
The DJI Phantom 4 is widely considered one of the smarter flying cameras. Small, agile and very intelligent, you can control it with a simple tap to automatically create seamless tracking shots, fly over or around obstacles, automatically hover and much, much more. It is perfect for the photographer or cinematographer, as well as operators wanting to work with organisations to help them create amazing imagery and aerial footage. As with the Mavic Pro, it is also a commercial grade drone package so if you’re in business and want to enjoy a remarkable drone with all attendant tax benefits, this may be for you!
This is considered the first videography drone in the word to integrate a high-definition (HD) video transmission system with a 360-degree rotating gimbal (mount) and a 4k resolution camera. It also has the benefit of app control. As with the Phantom and Mavic, it is the perfect compact, affordable drone package but for the more serious videography business. With an incredibly mobile and technology driven drone as transport, it is a truly professional drone that also enjoys all the tax benefits of a commercial business tool.
Moving away from pure imagery, the Matrice 200 (M200) is purpose-built for commercial operators to perform aerial inspections and collect data – making drone technology an affordable and easy-to-use tool. It is rugged, easy to carry, set up and fly with a weather and water-resistant body, ideal for field operations. As a professional but affordable drone package, it also enjoys all the tax benefits of a working business tool.
Always talk to the experts
If you are already in or are considering moving into a drone enterprise, it is highly-recommended you speak to a commercial drone specialist.
At Sphere Drones, we are widely considered one of Australia’s leading commercial drone experts.
From our Sydney-based solutions development centre, we combine the very latest in commercial drone technology with sales, leasing, service and solution development - all overseen by Australia’s leading drone professionals.