You're special. I know it.
So many clients come to us feeling like their old accountants just don't understand them, their industry and the common expenses they incur as part of running their business.
We get it.
This blog covers the common deductions our creative clients might be entitled to. It’s a resource for you, but of course you should speak to us or your accountant about what’s right for your individual circumstances.
We're trained and able to handle every industry, but our passion lies with the arts, and our speciality is in tax and accounting for creatively-minded small business owners.
Generally speaking, our clients come from these industries:
... and everything outside of the box!
There are SO many laws around what constitutes a deduction, to what extent, by who, and in which year. Here are some hot tips to get you thinking.
Largely, these are in alphabetical order...
I promise I did not intentionally put me first, but yes, paying a tax agent for their services is generally an allowable deduction.
You can claim a deduction for the total cost of advertising your services/business.
These are deductible when they are like commissions paid to theatrical agents. A deduction is not allowable for up-front fees or joining fees paid to an agent.
I didn't make up these rules! A deduction is not allowable for the costs of preparing for and attending auditions, so think of it like applying for a new job.
If you use your car for your small business or for your "day job", then we might be able to get you a deduction for the use of your personal vehicle. There are a few different ways to go about this, such as cents per KM, log book, and actual expenses.
There’s A LOT of rules around this which is why you should read our special blog just on this one topic!
A deduction is not allowable for child care expenses. If only...
You can claim a deduction for consumable items you use solely for earning your income as an employee/small business owner. For example, in the adult industry, you could deduct for condoms, lubricants, gels, oils and tissues. Other industries will no doubt have different 'consumables'.
Clothing & Footwear (& Costumes)
You might be able to get a deduction for these expenses when you buy, hire, repair or replace clothing, costumes, uniforms and footwear you wear at work if it's:
*A deduction is allowable for the cost of conventional clothing bought or hired as a costume for a role (see TR 94/22) but we might have to "apportion", which means split some personal, some business/work. A deduction is not allowable for the cost of a performing artist's conventional ‘street wear’ worn at work.
Maybe this is why we go all out when it comes to costumes? The more ‘normal’, the less deductible?
We often get people wanting to push this boundary, but the ATO is clear and you generally cannot get a deduction for:
Fun fact: (not fun!) there was a specific tax determination for those in the Orchestra, that "evening wear" would not be deductible. Boo!
Related to this is Laundry and Dry Cleaning Expenses:
Generally speaking, you can get a deduction for the cost of washing, drying and ironing the above deductible clothes, costumes etc.
If your laundry claim (excluding dry cleaning expenses) is $150 or less, you don't need to keep records but you will still need to be able to explain how you calculated your claim. This is not an automatic deduction.
Coaching (singing lessons etc.)
Pitch perfect, here we come!
A deduction is allowed for the cost of classes taken to maintain existing skills or obtain related skills. This means I cannot get a deduction for singing lessons, as an accountant. But maybe you can? A deduction is allowable for the cost of lessons to acquire skills for use in a particular role or performance too.
See also Education below!
Computers and Software
These days we have a lot of this - be it laptops, monitors, or Adobe, or Xero. What is deductible, and how the deduction is calculated depends. Generally, you get a deduction for the asset, like a laptop, through depreciation*. In contrast, subscriptions might be deductible as a monthly expense.
*At the time of writing there is a special "small-business write off" rule that might allow you to depreciate in full, so get the deduction for the full cost in the year of the purchase.
Don't forget: the deduction must be apportioned (split) between work-related and private use.
Conferences, Seminars and Courses
There is an allowable deduction for the cost to attend these, but not usually for any lunch or entertainment/meals either side or during. To get the deduction, you need to show that this event is maintaining or increasing your knowledge, ability or skill in your existing profession i.e. it is in connection with your income-producing activities.
See Education below as well.
This is a deduction for the use of an asset like a car or a computer or equipment. There are specific rules about which assets, and how to calculate the amount of the deduction for each year.
An item of equipment bought on or after 1 July 1991 can be depreciated at a rate of 100% if its cost is not more than $300, or if its effective life is less than three years (section 55 of the Act). Handy.
You might be able to depreciate in full, depending on the year we're talking about. At the time of writing there is a special "small-business write off" rule that might allow you to depreciate in full, so get the deduction for the full cost in the year of the purchase.
Giving to others is a wonderful thing to do, whether or not you get a tax deduction for it. There are some specific rules around when you can claim a deductions for donations made. Check out our blog on this one!
Even if you need it for your job/work, a deduction is not allowable for the cost of acquiring or renewing a driver's license.
Education & Professional Development
We have a more in-depth blog on this one too - there is quite a bit to it. The ATO refers to these expenses as ‘self-education’. Generally, these are deductible when they have a connection to your current work or employment. They should maintain or improve the specific skill or knowledge required in your current work activities or result in, or was likely to result in, an increase in income from your current work activities. It is not about a life/career change.
Heads up: you can't claim the repayment of loans you receive to help pay for your self-education or study expenses. This includes:
No deduction allowed for entertainment. Ugh. Maybe if the ATO allowed this we’d have bigger audiences?
This is probably why people assume Accountants are no fun.
Why? These expenses are considered to be private and not sufficiently related to the production of income.
Events, Social Functions & Award Nights
A deduction is not allowable for the cost of attending award nights or other social events, whether there is an entertainment industry connection or not. Consider it a business expense, but not a tax expense. You can (and should) still go and celebrate the wins!
Glasses & Contacts
Twirling upside down around a pole, but need glasses? What a challenge!
Unfortunately, prescription glasses and contact lenses are not deductible, even if you kind of need them for work. That said, a deduction is allowable for the cost of tinted contact lenses to alter eye colour, or special spectacle frames required for a role.
Gym & Fitness Expenses (including physio, chiro, massage)
These costs can be deducted for only if it can be shown you are required to undertake physical fitness for your performing artist role/work, or for your employment. Physical activity needs to be an essential part of your income-producing activities.
If you feel like you're 'playing in the grey' ... don't. Be sure to always apportion for personal v work.
For basically everyone else, these costs are not deductible because they are considered to be private in nature:
Hair & Make Up
Let's all petition for this one, please?
A deduction is generally not allowable for grooming expenses such as hairdressing, make-up and facials.
When can you get a deduction?
This one is a bit involved so we have a separate blog on this too.
Chat to your accountant about this one, because it can impact Capital Gains Tax too.
Insurance expenses can be deducted for, to the extent the cost relates to a work-related asset (like photography equipment, or a laptop for example).
Generally, no. Not deductible.
If you eat out during ‘normal’ working hours (your normal...) then no deduction. If you are employed somewhere and work overtime, then you might get a meal allowance. In this case you could simultaneously claim the deduction for the cost of the meal you buy. There are special substantiation rules here (i.e. evidence you need to have) in order to claim the overtime meal costs.
If you are travelling in relation to your income-producing activities, then you might be able to deduct for food.
See also Travel Expenses, and Entertainment.
Memberships (Unions and Professional Bodies)
We all want to be a part of something special right?
For me, it is the Institute of Chartered Accountants. For you, it might be a union or another body.
You can get a deduction for the annual fees you pay for membership, but not for any joining fees they might charge or for special contributions you make.
You can't just deduct for music because you want a ‘vibe’.
You can claim a deduction for the work-related part of the cost of multimedia, if it's directly related to your current employment/work. For example, a dancer could deduct for this (or at least a % of it) when they download music files or subscribe to a music platform for rehearsals or performance.
Nope. Not deductible.
Parking Fees (not fines)
Yes! If you need to pay for parking fees while travelling for your employment or work, then keep the receipt and get a deduction for the cost.
You cannot get a deduction for parking fines though.
You can get a deduction for the work/business related use of your phone (not for the personal use). If you buy the phone yourself, then you can also get a deduction for the actual cost of the asset (depreciation deduction).
See also Depreciation, and remember to apportion.
There is no deduction for the installation costs of a phone, and no deduction if you are employed and your employer provides the phone and pays for it for you (you lucky duck).
There is a deduction available for your "professional library" of resource materials. The content of this library must be directly related to your income-producing activities.
Research (for a role)
A deduction is allowable for costs incurred in researching a role or character that a performing artist is engaged to play. You would need to show how the costs relate to that specific role.
Love reading? Subscribe to newsletters? You can get a deduction for the cost of buying or subscribing to journals, periodicals and magazines that have a content specifically related to your employment or work, so long as they are not 'general' in nature.
Tickets to Shows
If you are a performer, and if the show you are seeing is directly related to your income-producing activities, then you can claim a deduction for the ticket cost for you (not your buddy).
See also Research and Education expenses.
For everyone else, this is generally considered ‘entertainment’ and is specifically excluded (i.e. not deductible).
Tools & Equipment
You can claim a deduction for tools and equipment if you use them to perform your duties as an employee or in your work.
These are going to be different for each industry and individual. For example, a photographer would have cameras and SD cards. In the adult industry, equipment could include fetish equipment, adult novelties and vibrators.
Some key info:
Worked it too hard? You can also claim a deduction for the cost of repairs to tools and equipment.
Sugar daddy buying your tools? You can't claim a deduction for tools and equipment that are supplied by your employer or another person.
These expenses are deductible when in relation to you earning your income (through employment or business).
Travel expenses include the following:
Be sure to check out Car Expenses above (and our other blog on this). You should take note that parking at or travelling to a regular workplace (i.e. from home to work) is not ordinarily considered to be a work-related use of the car... so, not deductible.
That is a lot of deductions, right!?
The ATO has some awesome info on other industries too! Check to see common deductions for your industry, or get in touch with us today.
Make sure you are keeping good records of everything and saving those receipts, ready for tax time!
and my incredible co-author, Mike Sangalang