Creative Clients - Common Deductions

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. 

Which industries do we look after?

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:

• Adult industries
• Actors
• Cleaners
• Comedians
• Dancers
• Designers
• Fitness
• Hairdressers and beauty
• Hospitality
• Media
• Performers
• Photography & Videography
• Retail
• Sales & marketing
• Writers
• Visual artists

... and everything outside of the box!

Common deductions

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... 

Accounting Fees 

I promise I did not intentionally put me first, but yes, paying a tax agent for their services is generally an allowable deduction. 

Advertising 

You can claim a deduction for the total cost of advertising your services/business.

Agent Fees

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.

Audition Costs

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. 

Car Expenses

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!

Child Care

A deduction is not allowable for child care expenses. If only...

Consumables

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:

• Protective clothing and footwear, and required to protect you in relation to how you earn your income.
• Occupation specific (and not a conventional, everyday piece of clothing*). This is where some accountants don't ‘get it’. An example in the arts would be ballet tights and slippers. 
• Re-buying or hiring costumes.
• A compulsory uniform that identifies you as an employee of your organisation (i.e. there is a logo on it), and usually the employer will have an enforced policy in place.
• A non-compulsory uniform, if your employer has registered the design with AusIndustry.

*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:

1. Clothing in a specific colour 
   Unfortunately this doesn't usually count as a uniform. Black clothes for filming or hospitality is not enough - sorry! You can't claim a deduction for the cost of buying or cleaning plain clothing worn at work, even if your employer tells you to wear it.
2. Heavy duty conventional clothing such as jeans and black trousers are also not deductible.
3. Running shoes or casual shoes might be necessary, but are not usually deductible.

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. 

Depreciation

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.

Donations

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! 

Driver's License

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. 

Some examples:

• Text books
• Stationery
• Student union fees
• Student services and amenities fees
• Course fees
• Depreciation of your laptop etc.
• Accommodation and meals (where course requires you to be away from home overnight), and;
• Tuition fees.

Heads up: you can't claim the repayment of loans you receive to help pay for your self-education or study expenses. This includes:

• Higher Education Loan Program (HELP) loans
• VET Student Loans (VSL)
• Student Financial Supplement Scheme (SFSS)
• Student Start-up Loan (SSL)
• Trade Support Loan (TSL) Program.

Damn. 

Entertainment

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.

This includes:

• Award nights, gala or social nights, concerts or other similar types of functions or events. This applies even if there's an entertainment industry connection.
• Costs incurred in attending compulsory or non-compulsory functions. This includes functions such as dinners, dances and cocktail parties.
• The cost of travelling to and from functions is also not deductible.

Why? These expenses are considered to be private and not sufficiently related to the production of income. 

Events, Social Functions & Award Nights

Party anyone?

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:

• Gym fees.
• The cost of a program specifically designed to manage weight.
• The cost of normal food substitutes or the cost of food for special dietary purposes.
• The cost of vitamins, minerals, or sports supplements such as protein shakes.

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?

• If you are a performer and you have to have a particular style for the role.
• If you are a performer and for consistency of the characters look over time you need to get your hair done.
• If you are a performer and make up is necessary for stage, film or television purposes. 

Home Office

This one is a bit involved so we have a separate blog on this too.

• Place of business: A deduction is allowable for a proportion of running and occupancy expenses if an area of the home has the character of a place of business (like you converted a garage to be a dance studio).
• Private study/studio: A deduction is allowable for the running expenses only of a private study or studio to the extent that it is used for work performed at home (home office).

Chat to your accountant about this one, because it can impact Capital Gains Tax too. 

Insurance

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). 

Meals

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.

Music/Multimedia

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.

Newspapers

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.

Phone

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). 

Professional Library

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. 

Examples:

• Books
• Tapes
• CDs
• Records
• Videos

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. 

Technical Publication

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:

• If the equipment cost you $300 or less, and you use it for work only, you can claim a deduction for the whole cost in the year you purchased it. Otherwise, you can claim a deduction for the cost over the life of the item (that is, depreciation).
• If the item is part of a set that together cost more than $300, you can claim a deduction for the set over the life of the asset. See Depreciation.
• If you also the thing for private purposes too, you can only claim the work-related portion.
• If you bought the tool or item of equipment part way through the year, you can only claim a deduction for the portion of the year that you owned it. See Depreciation.

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.

Travel Expenses

These expenses are deductible when in relation to you earning your income (through employment or business).

Travel expenses include the following:

• Public transport, air travel and taxi fares.
• Bridge and road tolls, parking fees and short-term car hire.
• Meal, accommodation and incidental expenses you incur while away overnight for work (unless reimbursed) - chat to your accountant about this! There are special substantiation rules for travel expense deductions.
• Expenses for motorcycles and vehicles with a carrying capacity of one tonne or more, or nine or more passengers, such as utility trucks and panel vans.
• Actual expenses, such as petrol, repair and maintenance costs, that you incur to travel in a car that is owned or leased by someone else.

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! 

xxx Lauren

and my incredible co-author, Mike Sangalang