3 tips to maximize your tax refund – is going to the gym a deductible item

The financial year 2017 tax return time is coming, and it is essential to arrange your tax affairs 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

  1. It is incurred in gaining or producing your assessable income or
  2. It is necessarily incurred in carrying on business to gain or produce 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.

Gym membership

Recently, we have seen a boom in the number of people attending GYM sessions, to improve their well-being, and to enhance productivity at the workplace.

Is gym membership deductible

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 issue, it is also important to note that certain professions would enjoy some deductions that 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 Defense Force members. Generally, such costs are considered to be private and not deductible under S.8.1 of ITAA 1997.

However, a deduction is allowable for these costs if the police officers or Australian Defense Force members can demonstrate that strenuous physical activity is an essential and regular element of their particular occupations income earning activities. These would include physical training instructors or members of special combat squads or special emergency squads and they are required to maintain a level of fitness WELL ABOVE the average defense force members.

Hence for the fitness instructor, personal trainer, or even firefighter, the answer to whether they can claim gym membership will be a no in nature.

Deduction for businesses to purchase gym equipment or other seemingly nondeductible items

However, if a business purchases a set of gym equipment in their office and allocates it strictly for the employee to use and has 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 into effect; it is also important for the accountant to be able to draft a private ruling to submit to the Commissioner of the Australian Taxation Office to ascertain the outcome.

One of our clients purchases many cigarettes and supplies those to their club premises to VIP clients.

Under this situation, normally it would be private and domestic. 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 is 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 expenses 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.

gym tax

Is travel expense deductible

It is important to note that the 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 the Australian Taxation Office, in which valid invoices must be kept for five years.

Please give us a call at 0410-829-900 if you have questions on the taxation issue and want to maximize the tax refund.