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Tax Tips For Hair And Beauty Salons

The end of the financial year (EOFY) might not be your favourite time of year, but it doesn’t have to be challenging. As a salon owner, you can lessen the impact when filling in your tax return by ensuring you are aware of potential deductions, specifically for hairdressers.

Keep reading to find out more about potential expenses you can claim back against your taxes in this guide.

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What tax deductions can you claim as a hairdresser?

The Australian Taxation Office (ATO) allows you to claim tax deductions on business-related expenses made during the financial year. In the case of salons, you can save on your tax bill by deducting the range of expenses you spend on your business. 

There are plenty of allowable deductions, but you need to be clear on what is allowed and what isn’t so that you don’t get in trouble with the ATO.

In short, you must spend the money yourself without reimbursement, and it must directly relate to your income-earning activities. Additionally, you need to keep records to prove your deductions. Here are some of the things you can deduct in more detail.

Clothing expenses

In general, you may not be able to deduct clothing expenses from your tax bill, with few exceptions, even if you have specific items that you wear only for work. This is because most clothing, including items like jeans, shirts, shorts, etc., are considered conventional clothing, meaning they can be worn every day regardless of a person's profession. 

However, you may be able to claim back expenses for protective clothing items, such as aprons or masks. If you have a compulsory uniform, which employees must wear based on a strict policy, then you can also claim this as an expense. The ATO requires that the uniform is distinctive to your organisation and that it’s consistently enforced.

If any clothing falls into this category, then you can claim the money you spent on purchasing, hiring, repairing, or cleaning it.

Car expenses

The ATO is strict about travel expenses. You cannot claim a deduction for driving to and from your place of work.

However, you can claim a deduction for the cost of travelling between two workplaces on the same day. For example, if you are working at an alternate salon owned by the same employer or to a second job with another employer, then these count as deductible expenses.

There are times when you can claim travel between your place of work and your home, such as when you are carrying bulky tools or equipment. To claim the cost of trips where you are carrying bulky tools, you need to meet all the following conditions: 

  • The tools are essential for your work duties
  • The tools are bulky and difficult to transport
  • There is no secure place to store the tools at your workplace

You will need to keep a strict logbook to calculate how much you spend on these work-related journeys. You can also use the cents per kilometre method for up to 5000 km of work-related travel, but you must be able to show that these kilometres travelled were work-related.  

Typically, you can also claim a deduction for transport costs for public transport, rideshare or taxis under the same circumstances. So, whether you have a private vehicle or catch the bus, make sure you keep track of your expenses.

Tools and equipment

Hairdressers and beauticians use a lot of specialist equipment. If you buy these tools yourself, you can claim a deduction on them. This includes:

  • Hair cutting and styling tools
  • Wax pots and materials
  • Insurance for any tools and equipment
  • Repairs to your tools and equipment

Notably, if your tools cost more than $300, you must claim a deduction of the cost over a number of years, accounting for the decline in value. As with other expenses, if you use your tools for private use as well, then you can only claim for work-related use.

Self-study expenses

If you work in a hair or beauty salon, or own one, and are taking a course to improve your skills, you can claim deductions on the cost of the course. The course must directly relate to your job and help advance or maintain your skills. 

It does not count as a deductible expense if your study is general or if it is designed to get you a new job, even if it’s in a related field. For example, a hairdresser cannot claim a deduction on a course to become a makeup artist.

Other expenses

Other work-related expenses can also be deductible, such as union fees, subscriptions to technical publications, or personal protective equipment.

Also read: Tax claim tips for real estate.

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What tax deductions can’t you claim as a hairdresser?

There are some expenses you might expect to be deductible but are not. For example, personal grooming expenses are not deductible from your tax bill.

Similarly, other private expenses are not deductible. This includes music subscriptions, childcare, fines, and vaccinations, even if you are required to have these things for work.

Keep track of your records with ease

Staying on top of all your accounting records can be challenging, especially if you are often spending on equipment and repairs. QuickBooks offers an easy way to stay on top of accounting for beauty salon owners, with software that helps you keep track of all your incomings and outgoings.

Our powerful accounting software has a way to invoice easily and track your payments, pay your staff, and manage your expenses. With the mobile app, you can even capture receipts on the go so that when it comes time to fill in your tax return, everything is ready to go.

If you’re ready to streamline your accounting, try QuickBooks with a 30-day free trial to find out how it can help you file your taxes easily.

While every care has been taken to ensure the accuracy of the information presented as at 01 May 2023, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.


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