The 2019/20 tax year will look very different for many of us, but we still need to lodge those returns. Taking into consideration COVID-19-related changes, small business tax specialist Mark Chapman gives us the lowdown for the fitness industry.
With the end of the financial year rapidly approaching, it won’t be long before its time to lodge your income tax return for 2019/20. 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.
Travel and meals
You may currently be housebound, but commuting and even air travel were still things many of us did earlier in the tax year – even though it may seem like it was years ago.
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 68 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.
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.
Buying fitness equipment
You can claim an immediate deduction for any work equipment that costs less than $300. If the item cost more than $300 and you purchased it between 1 July 2019 and 11 March 2020, you can write off the cost over the expected life of the asset. This could include weight sets, TRX, kettlebells, treadmills, exercise bikes, 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.
Instant asset write-off
If you own your own fitness business (rather than being employed by somebody else), you can write off items of equipment costing up to $150,000 each immediately (rather than writing off the cost over the expected life of the asset) if the equipment was purchased between 12 March 2020 and 30 June 2020. Before that date the limit was $30,000 for equipment purchased between 1 July 2019 and 11 March 2020.
As well as fitness equipment, you can use the same tax break to write-off any other capital assets used in your business, including:
- TV sets and other equipment to build the ambience in your fitness area
- Furniture for break-out or rest areas
- Office furniture and equipment, like desks, chairs and cabinets
- Technology such as laptops, desktop computers, phones and tablets
- Motor vehicles.
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 events like FILEX – even if they have been online virtual events this year – 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.
They may not be as significant in dollar terms as some of the items listed above, but make sure you claim the following:
- Any work-related subscriptions or membership fees (including your subscription with Australian Fitness Network)
- Magazines, journals, books, apps or websites which are related to your work
- The cost of using your personal mobile phone for work-related purposes
- Equipment hire.
Working from home
As a result of COVID-19, you have probably had to relocate your working activity from business premises to your home. If so, you can claim a rate of 80 cents per work hour during the crisis, 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 will apply from 1 March 2020 until at least 30 June 2020. The ATO may extend this period depending on when work patterns start to return to normal, but any such extensions will be applicable to the following tax year.
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.
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.
Remember to keep records!
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. If you’re not sure if you can make a claim, keep the receipt anyway and discuss it with your tax agent.
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.