Tax Tips For Yoga Teachers – Yoga Instructor Tax Deductions In Australia
Yoga is a business and businesses have to pay taxes, right. Yoga studios need to pay their utility bills, insurance, taxes, and licensing fees. This means if you own a Yoga studio or you are employed as a yoga teacher in a yoga studio or business you need to pay taxes. You have to declare your income to the Australian Taxation Office or commonly known as ATO.
As a yoga business owner, you need to keep a record of your profitable income and maintain an account book. Many online booking software makes things easier for yoga business owners to have an online ledger folio of their income or online transactions. This way you track your income and expenses throughout the year easily.
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What Is Taxable Income?
The ATO defines taxable income as follows: “Your taxable income is the income you have to pay tax on. It is the term used for the amount left after you have deducted all the expenses you are allowed to claim from your assessable income. Assessable income – allowable deductions = taxable income.”
If you are an Australian resident for tax purposes with a tax file number, you may be eligible for a tax-free threshold of $18,200. According to the Australian Government’s Treasury, the largest amounts of income tax in Australia are paid by high-income individuals.
Income taxes in Australia are calculated based on your total taxable income and the relevant tax rate based on certain factors such as your residency status. Australia’s progressive tax system means that if you earn more, you’ll usually need to pay more in tax.
Tax Deductions for Yoga and Pilates teachers in Australia
Tax deductions mean you can list those things on your tax return that you paid from your own pocket. This can help reduce your taxable income and that boosts your tax refund.
Tax deductions include work-related expenses like the costs of buying mats, tools for Pilates, and travel for workshops.
Due to Coronavirus, more people work from home and that means many people can claim some home office expenses as tax deductions as well.
Other types of deductible expenses include the rent you pay for your yoga studio if you have a rented property, on insurance policies, and on any investment that you do.
How Do Yoga Teacher Tax Deductions Work?
You need to find out which things come under tax deductions. Though you don’t get all the money back that you spend on tax-deductible items or services but you get a percentage of it and your taxable income is reduced by the amount you spend.
Remember that the amount of additional tax refund your deductions get you is not a fixed amount. It changes as your income increases or decreases.
Also note that Income tax is worked out based on what you earn in a financial year – such as from 1 July, to 30 June; or from 1 July, to 30 June – and any tax deductions or tax offsets you can claim during that time.
Here are the Australian income tax rates and brackets for the financial year for Australian residents, according to the Australian Taxation Office (ATO). This financial year started on 1 July.
|Total taxable income
|$0 – $18,200
|$18,201 – $45,000
|19c for each $1
|$45,001 – $120,000
|$5,092 plus 32.5c
for each $1 over $45,000
|$120,001 – $180,000
|$29,467 plus 37c
for each $1 over $120,000
|$180,001 and over
|$51,667 plus 45c
for each $1 over $180,000
How Much Do You Have To Earn To Pay Tax?
The ATO advises you will have to pay income tax on every dollar over $18,200 that you earn; earnings below that are tax-free. In addition to the rates in the table above, most taxpayers are also charged a Medicare levy of 2%.
According to ATO Australia if you are a yoga teacher employed at a Yoga studio or having a small business you may be able to claim deductions for your work-related expenses. These are expenses you incur to earn your income as a fitness or sporting industry employee.
To claim a deduction for work-related expenses:
- you must have spent the money and you weren’t reimbursed
- the expense must directly relate to earning your income
- you must have a record to prove it (usually a receipt).
What You Can And Cannot Claim?
When you are looking for yoga teacher tax deductions, here find what you can and cannot claim as a yoga teacher in Australia:
Yoga Teachers can claim a deduction for the cost of classroom supplies used to perform their job. Classroom supplies could include items such as stationery, Mats, Tools, Prizes to reward and encourage students.
|Yoga Teachers can’t claim a deduction for the cost of gifts for their students or for helping to meet students’ personal expenses like paying for eatables or energy drinks.
You can only claim a deduction for the work-related portion of an expense. If the item is used for work and personal use, then the amount claimed will need to be apportioned between work and personal use.
|You can’t claim a deduction for any part of an expense that is not directly related to earning your income or that is private.
|You can claim a deduction for travel expenses if you travel for performing your employment duties. This could include expenses for meals, accommodation, fares and incidentals.
You can’t claim a deduction for travel expenses if your employer or another person has paid for these or reimbursed you.
|You can claim a deduction for tools and equipment you use in earning your employment income, such as exercise equipment.
You can’t claim a deduction if the tools and equipment are supplied by your employer or another person.
As long as the expense relates to your yoga teacher employment, you can claim a deduction for the work-related portion of the cost of phone and internet usage excursions and camps, seminars, and conferences protective equipment such as sunglasses, sunhats, and sunscreen teaching aids technical or professional publications union and professional association fees
|You can’t claim a deduction for the cost of gifts you purchased for students meeting students’ personal expenses – for example, paying for lunch, excursions, or anything like this.
|You can claim a deduction for self-education expenses if your study relates directly to your current job.
|You can’t claim a deduction if your study is only related in a general way or is designed to help you get a new job. For example, you can’t claim the cost of study to enable you to move from being a personal trainer to a therapist.
What can Yoga teachers working from home can claim?
Note that the ATO has implemented a new method to calculate the additional costs of working from home. This method allows people, including yoga teachers, who are incurring some form of expense as a result of working from home due to COVID-19 to claim a rate of 80 cents per hour worked at home.
TIP: To claim or write off using this method you must keep a record of the hours worked from home.
While working remotely, as a yoga teacher you might have incurred costs to buy more furniture, upgrade your subscriptions to things like digital storage, and your electricity and phone bills. So this covers all working from home expenses, including the internet. No other separate expenses can be claimed as a deduction for working from home expenses.
Yoga teachers can calculate their additional running expenses if they prefer. These methods are:
Fixed-rate method – which allows you to claim
- a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture
- the work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery
- the work-related portion of the decline in value of a computer, laptop or similar device.
Actual cost method ─ claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.
For more information on how to calculate and claim a deduction under the actual cost method or fixed rate method, and the records a teacher will need to keep, see Home office expenses.
Personal items like laptops, tablets or desktop computers may have depreciated in value during this time. If an item costs less than $300 and is used solely for work purposes, a teacher can claim a deduction for the whole cost in the year it was purchased.
Remember, as a yoga teacher to claim a work-related expense, you need to satisfy the following:
- Must have spent the money and not been reimbursed
- It must be directly related to earning your income
- You must have a record to prove it
Note again that if the expense is used for work-related and private purposes, only the work-related portion of the expense can be claimed as a deduction.
The ATO wants to make it easier for everyone to keep good records. Download the ATO app and use the myDeductions tool to take photographs of your receipts. At tax time you can upload these records to myTax if you choose to self-prepare, or send directly to your tax agent.
For more information on what teachers can and can’t claim see, Teachers and education professionals – income and work-related deductions.
Q1. Is There GST On Yoga Services?
Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.
You may need to register for goods and services tax (GST), if your yoga income is greater than $75,000 per year. You will need to lodge an activity statement (AS) with the ATO.
Q2. Is Yoga Teacher Training Tax Deductible?
According to ATO any education course you take which qualifies you for a new profession is not deductible. It doesn’t matter if it’s a yoga course or any educational program; if it would qualify you for new work, then you cannot deduct it. So, if you’re working as a stockbroker or office worker and you decide you want a more physical and relaxing job like a yoga instructor, you cannot deduct the cost of your program.
But what if you’re already a personal trainer or casually teaching yoga without going through a formal training class and if the course would maintain or improve the skills that are required in your current job, then you can probably deduct the yoga course.
Q3. What Can I Claim On Tax As A Yoga Teacher?
Q4. Do Yoga Teachers Need An ABN?
Yes, Yoga teachers need an ABN or an Australian Business Number (ABN), a unique 11-digit number used to identify businesses. You can obtain an ABN from the Australian Business Register (ABR).
If you are running yoga classes from your home you may need council approval to teach from your home. The Australian Business and Licences Information Services (ABLIS) website provides information about licenses and permits you may need.
Q5. What Can Yoga Instructors Write Off On Taxes?
From the above, you have seen that there are a lot of expenses that can indeed be written-off come tax time.
But that doesn’t mean that everything is a tax write-off. So before you go listing all of your yoga teacher tax deductions, the following are that cannot be write off:
- Yoga Apparel: This is not considered as a uniform necessary for a yoga job and therefore can’t typically be claimed as a write-off.
- Yoga Teacher Training course: As said above while additional training courses can be deducted, your first training course cannot because it qualifies you for a new position. Your studio may offer to reimburse you or subsidize the cost so definitely check in with them if you’re already working in a studio and about to get certified for the first time!
- Travel Expense: Writing off travel expenses is one of the best parts of being self-employed. Unfortunately, you can’t write off mileage from home to your place of work, that is the yoga studio you teach out of most frequently. But, you can write off mileage between studios, to a client’s home for a private class, for a business lunch, and so on.
You can claim the cost of traveling between two workplaces, such as between two gyms or between two yoga studios.
If you plan to use your own car for work purposes, you can either claim a set rate of 68 cents per kilometer for all work journeys or you can claim the actual expenses incurred.
For more detailed information on yoga instructor tax deductions in Australia click here.