According to The Australian Taxation Office (ATO), there are several tax deductions beauty salon workers may be eligible for.
Below is the ATO’s guide to the tax deductions beauty therapists and salon owners may be able to claim on:
As an employee
- For more information view Deductions for work expenses | Australian Taxation Office (ato.gov.au)
- Key message: To claim a deduction for a work-related expense you must meet the 3 golden rules:
1. You must have spent the money and you weren’t reimbursed.
2. The expense must directly relate to earning your income.
3. You must have a record to prove it (usually a receipt).
| Deduction | Details |
| Clothing and uniform expenses (example available in the link) | With a few exceptions, clothing can’t be deducted as a work-related expense. You can’t claim conventional clothing (including footwear) as a work-related expense, even if your employer requires you to wear it and you only wear these items of clothing at work. You can’t claim a deduction for clothes unless they’re: protective, occupation specific and not a conventional, everyday piece of clothing such as jeans or general business attire, a uniform either non-compulsory and registered by your employer on the Register of Approved Occupational Clothing or compulsory. For example, you can claim a deduction for protective clothing that has protective features of functions that you wear to protect you from specific risks of injury or illness at work. For example, aprons or smocks worn to protect you and your clothes from harmful substances. Conventional clothes you wear at work are not regarded as protective clothing if they lack protective qualities designed for the risks of your work. This includes jeans, drill shirts, shorts, trousers, socks, closed shoes. |
| Laundry and maintenance (example available in the link) | You can claim a deduction for the costs you incur to wash, dry and iron clothing you wear at work if it’s protective (for example, an apron), occupation specific, or a uniform. This also includes laundromat and dry-cleaning expenses. |
| Newspaper and other news services, magazines and professional publications (example available in the link) | The cost of newspapers, other news services and magazines are generally private expenses and not deductible. You can claim a deduction for the cost of buying or subscribing to a professional publication, newspaper, other news services or magazines if you can show: a direct connection between your specific work duties and the content is specific to your employment and is not general in nature. If you use the publication for work and private purposes, you can only claim your work-related use. |
| Phone, data and internet expenses (example available in the link) | You can claim a deduction for phone, data and internet costs for the work-related use of your own phone or electronic devices. If you claim more than $50, you need to keep records to show your work use. For example, an itemised bill where you can identify your work-related phone calls and data use. You can’t claim a deduction if your employer: provides you with a phone for work and pays for your usage reimburses you for the costs. |
| Repairs to tools and equipment (example available in the link) | You can claim a deduction for repairs to tools and equipment you use for work. If you also use them for private purposes, you can only claim an amount for your work-related use. |
| Self-education (example available in the link) | You can claim a deduction for self-education expenses if they directly relate to your employment as an employee hairdresser or beauty professional and at the time the expense is incurred it: maintains or improves the skills and knowledge you need for your current duties, results in or is likely to result in an increase in your income from your current employment. |
As a small business owner
| Deduction | Details |
| If you’re running your own business, you can claim tax deductions on any money spent during the income year on products or services that directly related to earning your businesses assessable income. | |
| Digital product expenses | As a business owner, you can claim a tax deduction for the cost of digital products used in running your business. There are 2 types of expenses you can claim – operating expenses and capital expenses. The type of expense determines when you claim your deduction. You must apportion your expenses between business and private use, only claiming a deduction for the business portion. Operating expenses you can claim include; internet service provider fees, software subscription fees, the cost of running a website, file sharing services and cloud storage. Capital expenses you can claim include; the expense of a depreciating asset, computers and computer accessories, mobile phones and tablets, POS machines, in-house software, the cost of developing a website. |
| Software expenses | You can claim some software costs as operating expenses in the year you incur them, including: software subscription fees, the cost of commercial off-the-shelf software with an effective life of one year or less. If the effective life is more than a year, you need to consider if it is in-house software. |
| Furniture and equipment | Furniture and some equipment are examples of depreciating assets. If a depreciating asset is used in gaining your assessable income, generally you can claim deductions for its decline in value over time. You can apply the general depreciation rules to calculate your deduction for most assets. If you are a small business entity, you can use the simplified depreciation rules. |
| Small business energy incentive | For the 2023-24 income year, you may be able to receive a 20% bonus deduction 20% tax deduction for the cost of eligible assets and improvements that support more efficient use of energy. The incentive also applies to eligible expenditure on improvements to existing assets incurred during the bonus period. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000. |
| Instant asset write-off | For the 2023-24 income year, you may be able to deduct the full cost of eligible assets which cost less than $20,000, under the instant asset write-off (IAWO). Eligible assets must have been first used or installed ready for use, between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so you can instantly write off multiple assets. Eligible small businesses will also be able to write off the first cost of improvements incurred between 1 July 2023 and 30 June 2024 under $20,000, to qualifying assets that were written off in a previous tax year. |
This article was supplied by The Australian Taxation Office (ATO).
Read the current issue of our digital magazine here:
- For more news and updates, subscribe to our weekly newsletter
- Follow us on Instagram
- Like us on Facebook
- Join Australia’s largest network of beauty industry professionals on LinkedIn
- Subscribe to our print magazine
Have an idea for a story or want to see a topic covered on our site and in our pages? Get in touch at info@professionalbeauty.com.au.