Research from Office Works shows Australians miss out on $426 of personal unclaimed tax each year— or $1.65 billion nationwide. Even more sobering, is that the study suggests business owners could be losing 10 x as much.
People are also largely in the dark about what they can claim with 40 per cent of people saying they had no idea they could claim a tax deduction on petrol, while 30% didn’t realise home office expenses could reduce their tax bill.
Finance writer Justine Davies said “Unfortunately most people don’t think about it until after June 30 …[But] if people can think about it now as opposed to early July that will be more money in their pocket this year.”
BASIC RULES FOR DEDUCTIONS
Generally speaking, the ATO states that to claim a tax deduction a purchase must have been made in the last financial year and be work-related rather than personal or domestic. It must be something you won’t be reimbursed for, and you may need a receipt as evidence.
Provided this criteria has been met, employees can generally claim work-related vehicle and travel expenses, occupation specific clothing, laundry and dry-cleaning costs as well as gifts and donations made to organisations deemed to be deductive gift recipients.
Things like home office expenses, self-education costs, plus any journals or trade magazines can also be claimed, as can tools and equipment for work, and union fees. It’s also possible to get tax deductions on interest and dividends if any expense was incurred while earning them and expenses incurred in last year’s tax return.
3 Tips From The Expert
1. Instant Asset Write Off
Following last year’s budget announcement surrounding the “instant asset write off” for plant costing less than $20,000, a business is able claim 100 percent of a purchase as a business expense within that financial year, instead of depreciating the asset over an extended time period. Therefore if a health club knows through tax planning that profit is up this financial year, the purchase of gym equipment if needed should reduce profit and tax.
For example. John the Gym Owner buys 4 new treadmills for his club valued at $10,000 each. Due to current legislation, the whole amount of $40,000 is able to be deducted from the income generated for the year.
This rule specifically applies to businesses that are under $2M in turnover, and was announced in the recent budget to increase to $10M from 1 July 2016. If you are hearing feedback from your clients that your equipment needs to be updated in order to prevent people leaving and going to a more modern club, this is a very useful strategy.
2. Review your Trading Entity
With the end of financial year coming to an end, now is a good time to review the entity structure that your business is operating under. This is very individual to each business but it could be a way to more reflect how the business operates.
For example. Dave runs his outdoor boot camp business as a sole trader. Dave and his wife Anna are expecting a baby next year, they expect Anna will take a full year off work and become part of the business. Anna may have no entitlement to receive compensation from the government regarding paid parental leave. If Dave transfers his businesses into a Trust entity profits can be distributed to Dave and Anna based on their circumstances. This can be a very useful strategy, but ultimately depends on the circumstances of each business and its operators.
3. Consider your Timing of Expenses
If you know you have had a good year, then look at expected costs for July and August and see what can be brought forward to reduce your taxable income in the current year. You pay the same cost, but with some planning you can receive the tax benefit in this year rather than 12 month later.
Disclaimer: This advice is general in nature and should be acted on without first consulting your accountant to see if this advice is applicable to your personal situation.
For specific tax advise for your gym – contact the fitness industry tax specialist
Mr Ryan Hastie – Accountant
RSM Australia 564 David Street ALBURY NSW 2640
P: +61 (0) 2 6057 3000 | E: ryan.hastie@rsm.com.au
**2017 Updates**
- The annual turnover threshold has also been increased to $10 million—a big increase on the previous $2 million per year annual turnover limit!
- Instead of paying you staff more – why not teach your staff how to keep more of their income
Here is a list of deductions your employees may be able to claim
A) Car expenses
You cannot claim deductions for your car expenses from home to work even if:
- you work outside normal business hours, for example, shift work or overtime
- you are on call
- you did minor work-related tasks on the way to work or home
- you travel between home and work more than once a day, or
- there is no public transport available.
You can claim deductions for your car expenses for travel directly from one work site to the next.
You can claim deductions for your car expenses from home to work if you carry bulky equipment that you are required to use at work, as long as there is no secure area provided to leave them on site.
B) Travel
- You can claim the cost of travel if you have to carry bulky equipment (such as inflatable exercise balls, or other exercise equipment) to and from work and there is no secure place of storage for them at your work.
- You can claim the cost of travelling between two workplaces, such as two different gyms or between two personal training (PT) appointments.
- You may claim the cost of your personal car if it is used for work purposes, including travel to meetings, conferences or training that is not held at your usual place of work, or to visit your patients at their homes. If you do plan on claiming the cost of using your personal vehicle, you will need to keep a diary of trips in order to provide an estimate of the number of kilometres travelled.
For more information motor vehicle claims, visit: VehicleTax Deductions.
- You cannot claim for sporting or fitness events you attend or participate in unless the event is sufficiently related to your job. For example, you can’t claim the cost of travelling to watch a client play football. You can claim the costs if you are coaching the team or you’re playing in the team for a salary.
- You cannot claim the cost of travel between work and home, even if:
- You’re required to work outside normal business hours
- You’re on call
- You do minor work-related tasks on the way to or from work
- You have to travel to work more than once a day (such as in the case of split shifts)
- There is no public transport available.
C) Meals
- You can claim the cost of travel and meals for work-related conferences and seminars. If you travel for more than six days you should keep a diary outlining your expenses.
D) Work Clothing
- You can claim the cost of purchasing, laundering and repairing a compulsory work uniform, such as a uniform that has the logo of a gym or sporting club (for which you work) on it.
- You cannot claim the costs of conventional clothing, including conventional exercise clothing such as shorts, runners, generic sporting tops etc even though these items are used in your everyday trade.
For more information, visit: Uniform Claims.
E) Training
- You can claim expenses related to university or TAFE fees as long as they are connected to your current employment and you’re not being reimbursed. For example, a personal trainer could claim the expenses of undertaking a Bachelor of Exercise Science.
- If you are eligible to claim the costs training, then associated expenses may include stationary, books, and student union fees.
- You cannot claim for a pre-vocational course, such as a Certificate III in Fitness.
For more information, visit: Self-Education Claims.
F) Work Equipment
- You can claim an immediate deduction for any work equipment that is less than $300.
- If the item costs more than $300, then you can claim the cost of its decline in value. Items could include weight sets, treadmills, exercise bikes, and other personal training equipment.
- If you’re required to work outdoors (such as conducting personal training sessions or classes outside), you can claim the cost of sun-protective equipment, including sunglasses, hats and sunscreen.
