The financial year 2017 tax return time is coming, and it is essential to arrange your tax affair to ensure that your tax refund will be maximized.
Under the ITAA 1998 S.8.1, Normally for PAYG or business income taxpayers, you only can claim the deduction against your income if those deductions are directly income related. Under S.8.1 it is written that you can deduct from your assessable income any loss or outgoing to the extent that
- It is incurred in gaining or producing your assessable income or
- It is necessarily incurred in carrying on business for the purpose of gaining or producing your assessable income
However, you can not deduct the loss or outgoing if it is private or domestic, capital in nature, or of a non-commercial loss in nature.
Recently, we have seen a boom in the number of people attending GYM sessions, to improve their well-being, and to enhance the productivity at the workplace.
There is also a surge in the number of people taking up the profession of Personal Trainer or Gym Instructor. Hence many people would ponder on the question as to whether GYM membership would be a deductible item on their tax return.
To answer this issues, it is also important to note that certain profession would enjoy some deductions which are not available to other professions.
Taxation Rulings 95/13 and 95/17 dealt with the deductibility of gymnasium membership fees for police officers and Australian Defence Force members. Generally, such costs are considered to be private in nature and not deductible under S.8.1 of ITAA 1997.
However, a deduction is allowable for these costs if the police officers or Australian Defence Force members can demonstrate that strenuous physical activity is an essential and regular elements of their particular occupations income earning activities. These would include physical training instructors or members of special combat squads or of special emergency squads and they are required to maintain a level of fitness WELL ABOVE the average defence force members.
Hence for the fitness instructor, personal trainer or even firefigher, the answer to whether they can claim gym membership will be a no in nature.
Deduction for business to purchase gym equipment or other seemingly non deductible items
However, if a business purchases a set of gym equipment in their office and allocates to strictly for the employee to use and no admission to the general public, then the outcome would be a bit different. In this case, the business might be able to claim the deduction for that gym equipment as the in-house entertainment expense.
However, the accountant needs to correctly set up certain parameters for the deductibility to come in effect; it is also important for the accountant to be able to draft a private ruling to submit to the Commissioner of Australian Taxation Office to ascertain the outcome.
One of our clients uses to purchase many cigarettes and supply those to their club premise to VIP clients.
Under this situation, normally it would be private and domestic in nature. We as their accountant draft a private ruling and submit it to ATO arguing on the ground those cigarettes are purchases to be supplied to the customers in the club. Those clients will not take the cigarettes out of the club, and the outcome of the ruling comes favorable to the customer, meaning the client can claim the cost of purchasing those cigarettes.
Travel expenses to be deductible
Some people also forgot to include the travel expense which they had incurred while traveling more than 1 overnight away from their main house, in that case, it is important to keep a diary and ensure that all invoices are kept.
It is important to note that Australian Taxation Office allows a $300 limit to total deductions which do not require any substantiation requirement. For the other deductions, then it is important to adhere to the substantiation requirement of Australian Taxation Office, in which valid invoices must be kept for five years.
Please give us a call on 0410-829-900 if you have questions on the taxation issue and want to maximize the tax refund.