Services Prices Tax Records Super Business Structures FamilyAssist Sole Trader Start a Business Rental Property

PERSONAL TRAINERS, FITNESS AND SPORTING INDUSTRY EMPLOYEES

TAX DEDUCTIONS

30 June 2016 & 2017

 

Travel to and from work is usually not a tax deduction.

Some exceptions are:


1. Carrying bulky equipment with no secure lockup at work.

 

(Bulkiness of equipment is determined by size & weight.  For tradesmen it could mean a minimum of a 40 kg tool box plus other items e.g. nail guns, drills, drop saws, materials, etc. Bulkiness is also determined by size e.g. Ladders, bench horses, large oil drums, spare tyres, etc.) If in doubt ask for a private ruling.


2. Travel between two places of work.


3. Travel to attend meetings and then to home or work.


4. Travel from home or work to see clients and then back to home or work.

 

5. Some travel to a place of education.

 

6. When you travel overnight for work.

This only applies to motor vehicles whose carrying capacities are 1 ton or less or fewer than 9 passengers.


Most of my clients use the ‘log book method’ or the set rate per kilometre method’.
 

Method 1

LOG BOOK METHOD

You must keep a log book for 12 weeks for each car once very 5 years.

You must start a new log book when you change cars or the business % changes by more than 10%.

You must have written evidence for registration, insurance, services, repairs, depreciation, interest, lease payments, RACQ, car washes etc.

PLEASE SUMMARIZE THE FOLLOWING:

Motor vehicle - 30 June 2016 and 30 June 2017 odometer readings

Motor vehicle - Log book % and business kilometres travelled

Motor vehicle - Fuel

Motor vehicle - Registration

Motor vehicle - Insurance

Motor vehicle - Interest or leasing expenses (Please provide hire purchase or loan agreement)

Motor vehicle - Repairs

Motor vehicle - Depreciation (Please provide date of purchase) 25% diminishing value method

If purcased between 12th May 2015 and 30 June 2017 and < $20,000 then depreciation is 100%.

Motor vehicle - Breakdown service e.g. RACQ

Motor vehicle - Car washes

Motor vehicle - An extended warranty is deductible spread over the period that the warranty applies. e.g. If you

have a factory warranty for 3 years then you buy an extended warranty for 3 years. You may claim an apportioned

tax deduction over years 4, 5 and 6.

 

You may claim $200 worth of items costing < $10 without receipts.

You do not need receipts for fuel based on a reasonable estimate of the cost per business kilometres travelled.

e.g. 500 kms per tank with an average fill up of 50 litres = 10 kms per litre.

Therefore 15,000 kms / 10 kms = 1,500 litres x $1.25 (average petrol cost per litre in QLD) = $1,875

 

Method 2

SET RATE PER KILOMETRE METHOD

Motor vehicle tax receipt exception: ‘set rate per kilometre method’ 66c per kilometre x up to 5,000 kms.

You must be able to work out your estimate by using a diary or regular pattern of travel.

This means that the maximum claim using this method will be 66c x 5,000 kms = $3,300.


 Example:

James is a personal trainer and carries bulky equipment including music & gym equipment, mats, boxing gloves, punching bag, balls and balance board, to and from work as there is no secure lock up on site. James has kept a log book for 12 weeks which shows his work travel is 95%. James purchased a Toyota Hilux which has a 2 litre engine on 01/07/2011 for $25,000 which he financed through a hire purchase chattel mortgage at an interest rate of 6%. His odometer reading on 30 June 2017 was 25,000 kms and his car does 500 kms on a 55 litre tank of petrol. The average cost for petrol in QLD was $1.25 per litre.

 

Method 1 - Log Book

Fuel 25,000 kms/(500kms/50 litre tank) x $1.25 per litre = $3,125

Registration $680

Insurance $650

Interest on loan  $25,000 x 6% = $1,500

Repairs, services & tyres $900

Depreciation $25,000 x 25% = $6,250

Breakdown service RACQ $96

Car washes $120

Total                                       $13,671  x 95% Log book = $12,654.95

E.g. Tax refund x 34.5c (tax rate $37,000 to $80,000) = $   4,365.96

 

Method 2 - Set rate per kilometer

Business kms 25,000 kms x 95% = 23,750 kms

Limited to 5,000 kms x 66c = $3,300

E.g. Tax refund x 34.5c (tax rate $37,000 to $80,000) = $   1,138.50

 

James chooses Method 1 because he will receive the largest tax refund.

OVERNIGHT TRAVEL EXPENSES WITH NO TRAVEL ALLOWANCE PAID

CONDITIONS

1.  You must be away from your ordinary residence. You must sleep away from your home.

2. You must not stay in one town for more than 21 consecutive days (Roads and Traffic Authority of NSW case; MT 2030).

3. You must keep a diary and written evidence. Try photographing these with your mobile.

PLEASE SUMMARIZE THE FOLLOWING:

Air fares

Taxis or car hire

Accommodation

Meals

Water

Alcohol - e.g. wine & beer

Snacks

Toiletries

Reading materials - e.g. newspapers, magazines, books, etc.

Movies - e.g. DVDs, in-house, cinema, etc.

You may claim for the following as they are usually connected with self education:

Attending conferences, courses, sports clinics & places of education.

For other sporting events there would have to be a direct connection between the event and your income earning activity.

UNIFORMS AND PROTECTIVE CLOTHING

Work related uniforms, protective clothing and laundry

Laundry

Laundry: You may claim up to $150 without receipts or less or you may use a reasonable basis to calculate the amount e.g. $1 per load for work related clothing.

Dry cleaning without receipts may fall under items that cost less than $10 up to $200. Sometimes if you use a regular dry cleaner they may be able to give you an annual tax receipts based on their records.

Protective clothing

Protective clothing are generally tax deductible if it is designed to protect:

Steel capped boots, high visibility shirts, fluro trousers, fire proof clothing, non-slip safety shoes, aprons, etc.

Conventional clothing

Conventional clothing is not deductible e.g. Track Pants, shorts, running shoes etc., unless they have a logo or part of a complusory uniform.

Strictly enforced uniforms

Strictly enforced uniforms are usually deductible as well as accessories such as stockings, footwear, socks and jumpers unless it is conventional clothing.

Non compulsory uniforms

Non compulsory uniforms are usually not tax deductible unless they are registered with AusIndustry or they have a logo.

HOME OFFICE WORK EXPENSES

Method 1

You may claim home office electricity based on floor area e.g. 5%. x $400 (electricity bill per quarter) x 4 = $80. This area must be for the sole purpose of home office. It cannot be for multi-use e.g. dining room table.

Furniture, desks, fax machines, filing cabinets, book shelves, pictures, carpets, blinds, etc may be depreciated at usually 20%.

Depreciable Items < $300 may be 100% depreciated.

E.g. desk $250 x 100%, chair $120 x 100%, carpet $1,000 x 20%, blinds $600 x 20% = $690

Method 2

You may use the ATO 45c per hour rate to claim electricity, gas and depreciation of furniture. You must keep a 4 week diary.

E.g. 45c x 20 hours per week x 52 weeks = $468

WORK EXPENSES

iPhone, mobiles & home phone

Computers - iPads, Macs, laptops & desktops

Computer supplies

Stationery - Cartridges, diaries, pens & office sundry

Internet

Self education, conferences and courses.

PRIVATE USE APPORTIONMENT

If there is private use (other than incidental use) a 28 day diary is required each financial year or where the work % changes by more than 10%.

A diary can be a simple A4 pad with a line in the middle with work & private on opposite sides.

RECORDS

You may claim $200 worth of items costing < $10 without receipts

EQUIPMENT AND OTHER WORK RELATED EXPENSES

EQUIPMENT

Equipment is usually 100% deductible except for the following:

For employees if a piece of equipment costs > $300 you must depreciate it usually at 20% per year.

e.g. weight machines, music equipment, laptops, etc.

For ABN businesses the 'General Small Business Pool' may depreciate tools < $6,500 at 100% per year.

From 1 January 2014 tools < $1,000 may depreciate at 100%.

From 12th May 2015 tools, Equipment and Motor Vehicles < $20,000 may be depreciated at 100%.

You do not need receipts for up to $200 of items that cost less than $10.

The $200 is the maximum for the whole tax return.

SUN PROTECTION AND SUN GLASSES

Includes sun glasses, sun screens and hats.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

TOLLS & PARKING

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

LICENSES

The license or renewal expenses must relate to your current income producing activity not income that will be made in the future.

The initial cost of some licenses may not be a tax deduction. e.g. the initial cost of obtaining a fitness qualification before you commenced employment as the expense has occurred at a point too soon.

COURSES

Courses include fees (but not HECS), books, laptops, internet, stationery, home office expenses, some travel to a place of education.

You do not need receipts for up to $200 of items that cost less than $10. The $200 is a total for the whole tax return.

The course must relate to your current income producing activity, not income that will be made in the future. e.g. Medical School expenses are not a tax deduction for a doctors income in the future.

If your course is run by a university, TAFE or college you must reduce your expenses by the first $250.

SECURITY/CRIMINAL CHECKS ATO TR 98/6 PARA 177

Security checks are usually not deductible as the expense happens at a point too soon before the income is earned.

Renewal of criminal checks may be deductible as you are currently earning income e. g school teacher's blue cards.

The ATO allows the preparation of resumes and travel to attend an interview as a tax deduction against Centrelink income.

ATO Practice Statement LA 2005/7

In some circumstances BPAY and internet banking statements may include sufficient details to support the correctness of your claims. Suppliers may not issue a receipt containing all the information required by the substantiation legislation. However you may use a combination of other documents to support your claims.

In some cases if a credit card statement has the date of the transaction, the name of the supplier and the amount paid and you make a note on the credit card statement detailing the items purchased with their respective prices, the Tax Office may accept this as sufficient evidence. See examples below.

The above does not apply for EFTPOS transactions because bank statements do not show cash withdrawals separately.

Practice Statement LA 2005/7

Example 2 - use of a bank or credit card statement combined with other evidence

22. Kylie, having just started her first full time job as a clerical worker, purchased a pen for use at work costing $50 from a jeweller's shop. She also bought a pair of earrings for $100 and paid for both items on her credit card. Having never completed a tax return before, she was not aware that the pen would be a deductible expense. She did not request or receive a receipt.

23. When it was time to prepare her return, Kylie realised that she could claim her pen as a work expense. She had also incurred union fees of $478, which were recorded on her payment summary.

24. Kylie checked her credit card statement and found that it showed an amount of $150 and the name of the jeweller's shop. Initially, she decided it would be safest not to claim for the pen because she had no specific receipt and she was not sure of the exact amount. However, she had kept the box the pen had been packaged in, and upon checking the box for further information noted the $50 price sticker on the outside. Before lodging her income tax return, Kylie made a note on the credit card statement detailing the two items and their respective prices and kept the pen packaging along with her bank statement.

25. By keeping the pen packaging and the credit card statement including her notation, Kylie has ensured she has sufficient information to substantiate her expense. The ATO will accept the combination of the pen packaging and the credit card statement as sufficient evidence to substantiate her claim.

26. Had Kylie not kept the box that her pen came in with the price sticker on it, but was able to obtain from the jewellery store a written breakdown of how much she spent on each of the items, she would also have been able to make a note on her credit card statement detailing the two items and their respective prices, and would have had sufficient evidence to substantiate her claim. The ATO would accept the combination of the credit card statement containing Kylie's notation and the written price breakdown from the jewellery store as sufficient substantiation.

DISCLAIMER

The information provided in the above documents is not intended to be, nor should it be construed as tax advice. Any specific recommendation for a client can only be done after their individual circumstances have been determined by David Douglas Accountants.

We have clients from the following locations:

Brisbane, Gold Coast, Sydney, Newcastle, Cairns, Canberra, Melbourne, Adelaide, Perth, Darwin.

Other:

Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor, Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra.

Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba, North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie Island, Elimbah, Kippa-Ring.

We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and sole traders.

Liability limited by a scheme approved under Professional Standards legislation.