Taking into consideration covid-related changes, small business tax specialist Mark Chapman gives us the lowdown on tax returns for fitness professionals and businesses.
With the end of the financial year rapidly approaching, it won’t be long before its time to lodge your income tax return for 2021/22. To get the best possible tax outcome, it’s essential that you understand what you can – and what you can’t – claim against your taxes, so here’s a checklist of the deductions all workers in the fitness industry should be considering claiming this tax year.
Remember, this list isn’t exhaustive and not all the deductions will apply to everyone. Similarly, you may be entitled to some deductions that aren’t listed here. Make sure you get professional help from a tax agent like H&R Block to ensure that you’re getting your return right.
You can’t usually claim the cost of the daily commute to and from work. The only exception to that rule is if you have to carry bulky equipment (such as inflatable exercise balls, or other exercise equipment) to and from work because there is no secure place of storage for them at your workplace.
You can claim the cost of travelling between two workplaces, such as between two gyms or two personal training appointments. This includes public transport and taxi costs.
If you plan to use your own car for work purposes, you can either claim a set rate of 72 cents per kilometre for all work journeys, or you can claim the actual expenses incurred. If you choose the latter, you’ll need to keep receipts for all costs (including road tolls and parking fees) and also keep a logbook of all your journeys for a 12-week period.
Just because you’re in the fitness or sporting industry, doesn’t mean you can claim for the cost of attending sporting events. So, if you’re a tennis coach, you can’t claim for the cost of tickets to the Australian Open. If, however, you’re coaching one of the players in the Open, you can claim the costs of attending.
If you were lucky, in between COVID-19 lockdowns, you might have undertaken some tax deductible interstate travel during the year. The cost of flights is tax deductible if they are for work-related purposes. When it comes to claiming meals, you can only do so if the expense is incurred due to your being away for work. The same applies to accommodation and incidental expenses.
You can claim a deduction for clothing that you’re required to wear as a uniform to work that has the logo of the gym, facility or sporting club where you work on it.
Unfortunately, you can’t claim a deduction for the cost of purchasing or cleaning a plain uniform or conventional clothing you wear to work, even if your employer tells you to wear them. So, general exercise clothing like tracksuits, shorts, tank tops, running shoes, socks, t-shirts and so on, can’t be claimed.
There’s good news, though, if you deliver outdoor training sessions, because you can claim the cost of sun protection gear such as sunglasses, hats and sunscreen. Slip, slop, slap, claim.
There are slightly different tax considerations for smaller and larger purchases.
You can claim an immediate deduction for any work equipment that costs less than $300. This could include weight sets, TRX, kettlebells and other personal training equipment.
Remember, if you also use the equipment for your own training, you’ll need to apportion the cost between work use and personal use. You can only claim the work-related element.
If you own your own fitness business (rather than being employed by somebody else), you can write off items of equipment immediately (rather than writing off the cost over the expected life of the asset) if the equipment was purchased after 6 October 2021. This tax breaks runs through until 30 June 2023. Just to emphasise, there is no monetary limit to what you can claim, although you might struggle to spend more than $150,000 on an item of fitness equipment!
As well as fitness equipment, you can use the same tax break to write-off any other capital assets used in your business, including:
You can claim expenses for university or TAFE fees to the extent that the course relates to your current employment and you’re not being reimbursed. For example, a personal trainer could claim for the cost of doing a Bachelor of Exercise Science. You can also claim associated costs such as text books, travel to the educational institution and stationery.
As a fitness professional, you need to undertake ongoing professional development to keep up to date with the latest practices in fitness and health, such as completing CEC courses or attending industry events like FILEX, including virtual events – so it’s good to note that these costs will also be deductible to the extent they are linked to your current job.
You cannot, however, claim for a pre-vocational course, such as a Certificate III in Fitness.
You could qualify for a tax deduction for the cost of a COVID-19 test (either PCR or RAT) where they are taken for work-related purposes, e.g. where there is a mandatory requirement under an employer’s COVID-19 mandate.
A COVID-19 test may also be required by certain countries and states in order for an employee to enter that territory or return to their home state. This too is tax deductible where the test is required for a work-related trip.
RAT kits purchased by individuals for private purposes (e.g. personal travel, convenience, no access to PCR testing) will not be tax deductible.
Remember to keep all receipts relating to COVID-19 testing and take them with you when you get your tax return prepared, together with substantiation that shows the test was for work-related purposes.
If you incur transport expenses to get to and from the site of a COVID-19 PCR test (or expenses in traveling to the chemist or supermarket to acquire an RAT), these will not be tax deductible as they are regarded as private expenses, even if the test is a condition of your employment.
If you are in an occupation that requires physical contact or proximity with customers or clients during the COVID-19 period, like the fitness industry, you can claim a deduction for items such as:
They may not be as significant in dollar terms as some of the items listed above, but make sure you claim the following:
As a result of COVID-19, you may have had to relocate your working activity from business premises to your home for at least some part of the last financial year. If so, you can claim a rate of 80 cents per work hour, so you will need to keep a record of the number of hours you have worked from home as a result of COVID-19. This applies until at least 30 June 2022.
If you use the 80 cents per hour method, you can make no other claims in relation to working from home – so items like mobile phone and internet usage are included in the 80-cent rate.
The alternative rate of 52 cents per hour may be more appropriate. This doesn’t include phone costs, home internet or the cost of writing off home IT equipment so when you make separate claims for those expenses, you may find that your total claim is higher. Your tax agent will be able to advise on which method produces the best results.
Your job is to help everybody else improve their physical fitness, so surely it makes sense that you can claim the cost of boosting your own fitness? Sadly not. The ATO takes a hard line on gym memberships, saying that they are only claimable where the person claiming them needs to have a level of fitness well above normal.
Professional sportspeople are quoted by the ATO as an example of who can make a claim, while personal trainers and fitness instructors are specifically ruled out.
Even if you’ve incurred any of the above expenses, the golden rule is that you can’t make a claim unless you can prove you spent the money (and also that you weren’t reimbursed by your employer). So, make sure you keep all relevant receipts, invoices, bank statements and credit card statements.
Your next step will be to book a consultation with your local tax agent, who can identify exactly what you need to do, and claim, to get into shape for the 2022 tax season and maximise your deductions.
Mark is the Director of Tax Communications at H&R Block. A Chartered Accountant, CPA and Chartered Tax Adviser, he holds a Masters of Tax Law from the University of NSW. Mark also spent seven years as a Senior Director with the Australian Taxation Office.
Disclaimer: Where Certificate III in Fitness or Cert III/cert 3 is mentioned, it refers to SIS30315 Certificate III in Fitness. Where Certificate IV in Fitness or Cert IV/Cert 4 is mentioned, it refers to SIS40215 Certificate IV in Fitness. Where Certificate IV in Massage or Cert IV/Cert 4 is mentioned, it refers to HLT42015 Certificate IV in Massage Therapy. Where Diploma of Remedial Massage is mentioned, it refers to HLT52015 Diploma of Remedial Massage.
Important Information: As of 9th November 2021 SIS40215 Certificate IV in Fitness and SIS30315 Certificate III in Fitness have been replaced by SIS40221 Certificate IV in Fitness and SIS30321 Certificate III in Fitness. A transition period applies to enable currently enrolled students to fulfil their study goals and complete their qualification. The transition period concludes on 8th November 2022. If you have not completed all the requirements by this date you will be transitioned and enrolled into the replacement qualification SIS40221 Certificate IV in Fitness and SIS30321 Certificate III in Fitness. View the SIS40221 Master Trainer Program Flyer here. View the SIS30321 Certificate III – Fitness Coach Flyer here.