Personal Trainer Tax Guide: Deductions, GST & Filing Tips

Alright, personal trainers, let’s talk tax. I know, I know – taxes sound boring, but stick with me. Whether you’re flying solo as a sole trader or working as a contractor, you’ve got to get your head around trainer income tax. It’s not just about paying your income tax – it’s about keeping track of business expenses, receipts and invoices, and everything else that falls under the umbrella of your financial records.

Here’s the good news: there are loads of tax deductions you can claim. From GST to professional development expenses, there’s a lot you can write off. The trick is knowing what counts, like the cost of equipment or the mileage you rack up running from one client to the next.

We’ll also dive into how your business structure affects your tax filing and tax liability. And let’s not forget about those sweet tax credits and tax exemptions that can help reduce what you owe. Ready to take control of your personal finance? Let’s get to work!

Tax basics 101 for Personal Trainers

Understanding Your Tax Obligations

Here’s the thing: tax obligations aren’t just about paying at the end of the year. You’ve got to stay on top of it throughout the year. This means keeping track of everything – from business expenses and receipts to your income. The taxman wants to know what you’ve earned and what you’ve spent, so it’s all about the numbers. Keep your financial records in check, and when it comes time to file, you won’t be scrambling for those receipts. Trust me, it’s a game-changer.

When Does Your Tax Year Start and What’s Due?

The financial year runs from April 1st to March 31st each year, and here’s a common misconception: your first year as a personal trainer (Sole trader or Contractor) isn’t tax-free. A lot of people think they get a free pass for their first year, but that’s not the case. In fact, if you’ve earned income in your first year of business, tax is due by the 7th of February the following year. So, don’t forget to file!

Now, after your first year of business, things get a little different. You might have to start paying provisional tax. This is essentially income tax paid throughout the year to help spread the load and avoid a nasty lump sum at the end of the financial year. If your taxable income for the year is more than $5,000, then provisional tax will kick in from your second year. You’ll make multiple payments throughout the year based on an estimate of your next year’s earnings. Provisional tax makes it easier to manage, rather than paying one big amount all at once. If you’re unsure about how to handle it, definitely speak with an accountant, reach out to the IRD or contact us if you have any questions.

Sole Traders vs Cgymontractors: How your business structure affects your tax

Are personal trainers Self-Employed?

So, are you a personal trainer flying solo or working under someone else’s umbrella? The answer to that is super important for your taxes. If you’re working independently, chances are you’re a sole trader or contractor, meaning you’re self-employed. Here’s the deal: as a self-employed personal trainer, you’re in charge of your own taxes. No one’s taking them out of your pay for you – it’s all on you to keep track, file your returns, and pay up when the time comes.

Do you know that around 40% of personal trainers in New Zealand are self-employed. That means you’re definitely not alone in handling your own taxes, but it also means you need to stay sharp and organized.

Choosing the right business structure

Now, let’s talk about the different business structures you can choose. As a personal trainer, your most common options are to go it alone as a sole trader or set up as a contractor for a larger fitness organization. Each structure comes with its own tax implications.

Here’s the breakdown:

Business Structure	Pros	Cons	Tax Implications
Sole Trader	Full control over your business	Personal assets at risk	Income tax based on profit
Contractor	Less admin, more flexibility	Less control over your work	Pay tax through your employer
Partnership	Shared responsibilities	Profit split and disagreements	Shared tax liabilities

Example 1: Let’s say you’re a sole trader. You run your own business, set your own prices, and handle your own tax filing. When it comes time to file your tax return, your business expenses and taxable income will be reported directly from your earnings, and you’ll pay income tax on your profits.

Example 2: On the flip side, if you’re working as a contractor for a gym, you may be paid by the gym directly, and they’ll handle some of the tax for you through withholding tax. This means less paperwork on your end, but also less control over your business expenses.

Tax deductible expenses for personal trainers

Common tax deductions

Alright, time to get into the fun stuff – tax deductions. These are the expenses you can claim to reduce your taxable income. As a personal trainer, you have a variety of deductible expenses that can lighten your tax liability. Let’s break them down:

• Business insurance: Whether it’s public liability insurance or professional indemnity, this is a big one. If you’re covering your business for potential risks, those costs are deductible.
• Car expenses: You’re probably driving around a lot for client sessions, so the miles you rack up can be written off. This includes mileage, fuel, and parking.
• Business equipment and fitness gear: From dumbbells and kettlebells to mats and resistance bands – if it helps you train your clients, it’s likely deductible.
• Home office costs: If you’re doing paperwork or admin from home, you can claim a portion of your home’s utilities – think internet, electricity, and heating – as a business expense.
• Marketing and advertising: Whether it’s online ads, flyers, or even your website maintenance, if it promotes your business, it can be claimed.
• Professional fees: Any legal or accounting costs related to running your fitness business. Check out our article related to the cost of an accountant if you want to know more.
• Travel costs: If you’re travelling for client sessions, don’t forget to claim those costs too, including gas or public transport fares.

Example: Let’s say you drive 500 km a month to meet clients. If you use your car 80% for business, you can claim 80% of the fuel costs, parking, and maintenance.

Special deductions

As a fitness professional, there are a few special deductions that apply to you that don’t necessarily apply to everyone else. These are things that directly relate to your business and profession:

• Exercise programs and wellness incentives: You can deduct costs for fitness programs you run for clients or employees. If you offer wellness challenges or fitness classes, that’s a write-off.
• Membership fees for professional associations: If you’re a member of an association like REPs or another professional body, you can claim those fees as an expense.
• Education and training expenses: Keeping your skills fresh is a must, and those certifications, courses, and workshops? They’re deductible. This includes both the course fees and any travel costs to attend them.

Example: Let’s say you attend a fitness certification course to upskill. The course fees, travel, and even accommodation for the trip are all tax-deductible expenses that can help reduce your taxable income. An other example could be if your gym membership is necessary for you to maintain a level of fitness required to perform your job, then it is more likely to be a deductible expense.

GST Implications

When does GST apply to you?

Let’s talk GST. Now, you might be wondering, “Do I need to worry about this for my personal training business?” The short answer: it depends. If you’re earning over $60,000 a year from your personal training gigs, then yes, you’ll need to register for GST. That’s the threshold that triggers the need to charge GST on your services.

But if you’re making less than that, you’re off the hook – for now. That doesn’t mean you can’t voluntarily register for GST, though. Some trainers choose to, especially if they have a lot of business expenses they want to claim back. It’s like a way to keep your finances tidy and get some GST back on things like equipment and marketing costs.

Charging and reporting GST

Alright, so you’re registered for GST for 2 months or 6 months and have chosen Invoice basis or Payment basis – now what? Time to start charging your clients. Whenever you provide a service, whether it’s a one-on-one session or group class, you’ll need to add 15% GST to the price. It’s pretty straightforward – just tack that onto your regular rates.

Now, when it comes to reporting GST, you’ll need to file it with the IRD every two or six months, depending on what suits your business. Don’t worry, it’s not as scary as it sounds. You’ll just report how much GST you’ve collected from your clients and how much GST you’ve paid on business expenses. The difference is what you owe (or what the IRD owes you if you’ve paid more GST on expenses than you’ve collected).

Example: Let’s say you charge $50 for a session. If you’re GST-registered, that $50 becomes $57.50 with GST added. That extra $7.50 goes straight to the IRD.

And don’t forget, you can claim GST back on the stuff you’ve bought for your business, like equipment or training programs. Keep track of those receipts!

Final Thoughts

So, there you have it – tax for personal trainers doesn’t have to be overwhelming. With a bit of planning, staying on top of your business expenses, and understanding your tax obligations, you can keep your finances in check and avoid any surprises. Whether you’re just starting out or already running your own business, knowing when and how to pay your taxes is key to keeping things running smoothly. And remember, if things get too complicated, there’s no shame in reaching out to a professional – an accountant or the IRD can help you navigate the details. Keep those receipts, track your income, and take control of your personal finance!