Are you a performing artist uncertain about which tax deductions you can and cannot claim? When you’re hitting the highways on your way to your next tour or crafting music in the studio, managing taxes can be hard to keep track of. Nevertheless, it’s beneficial to understand what deductions you can claim.
The 3 golden rules
As you may know, you are permitted to claim only the portion of an expense that pertains to your work on any money spent on products or services during the financial year. However, there are three crucial key points you need to keep in mind:
- You must have spent the money out of your own pocket without any reimbursement.
- The expense must be directly related to your income-earning activities.
- You must keep a record of your spending, such as invoices or receipts.
Your ultimate deduction checklist
Car Expenses
✅ You can claim the cost of trips when you transport bulky equipment between home and work. This may include if:
- you don’t carry the equipment only out of preference; they are required for you to carry out your job duties
- the workplace does not have a secure place to store the items.
✅ You can also claim the cost of using your own car when you drive directly between separate jobs on the same day. For example, from producing music at the studio to driving to a gig or meeting with your manager or your accountant.
❌ What you can’t claim is the cost of regular commutes from home to work. These are considered private expenses, even if you live far from your workplace.
Travel Expenses
✅ Did you know travel expenses can be claimed? Yes, you read that right! When your work calls in for a business trip and requires overnight stays, which needs to be paid at your expense, these expenses are eligible for claims such as your accommodation, fares, and meals—for example, if you are going on tour in another state for a couple of days.
❌ You can’t claim a deduction if accommodation, fares, and meals are paid by your employer.
❌ Additionally, reimbursement for any expenses you incur cannot be claimed.
Grooming Expenses
✅ You can claim the cost of any grooming expenses if it includes the cost of hairdressing services for a specific role, stage make-up, as well as the cost of cleansing materials for removing stage make-up.
❌ You can’t claim the cost of hairdressing services and cosmetics that are not related to your role or costume but are necessary to look well. These would be considered as private expenses.
Clothing Expenses
While you can’t claim conventional clothing including footwear as a work-related expense, you may be able to claim a deduction for the cost of conventional clothing bought or hired as a costume if only used for a particular role.
“Conventional clothing” refers to the everyday attire worn by individuals, regardless of their profession.
❌ You can’t claim the cost of everyday clothing, even if it is worn for work purposes. For example, if a singer buys a pair of black jeans and a stylish shirt that they wear both on stage and off stage, these expenses cannot be claimed since these items are considered ordinary clothing suitable for everyday wear.
✅ You can claim the cost of a costume if it is occupation specific. For instance, if a singer purchases a unique outfit specifically for their stage performances, such as a custom-made suit that they wouldn’t wear off-stage. These items are essential for their performance and are not suitable for everyday use.
Other Expenses
✅ You can deduct the work-related portion of various expenses tied to your employment, including:
- maintaining a photographic portfolio for publicity purposes
- maintaining your social media profiles and other marketing costs
- research materials such as the business portion of subscriptions to Spotify, Netflix and other media providers
- the cost of multimedia like downloading music files used for rehearsals.
❌ However, there is a list of private expenses you can’t claim such as:
- entertainment or social functions, as events like these are unrelated to the activities that generate your income
- the cost of travelling to and from functions
- any expenses related to preparing for an audition as these are connected to the job-seeking process rather than the actual work itself.
If keeping track of your business records feels overwhelming, we’ve got you covered! Our tax experts here at Calculated Matters are ready to introduce you to some fantastic record-keeping apps and accounting software like Xero and Hubdoc. These tools can transform your record management from a chore into a breeze. Reach out to us today, and let’s make your accounting hassle-free and your business running smoothly!
Feel free to call us at 0425 223 390 or email us at hello@calculatedmatters.com.au.
