Tax time can be quite a confusing time of year for a content creator. You would have so many questions! What is a tax deduction? Can I even claim my travel as a tax deduction? What do I need to prove a tax deduction?
We’ve put together this easy to follow blog post to help you when it comes to travel expenses. As a content creator, there are so many opportunities for travel. Your travel could be a tax deduction as you are going to build your business, network and to represent you as a brand. With PAX Australia and TwitchCon just around the corner, we want you to be prepared for when tax time rolls around next.
Please note that Player 2 HQ is in no way shape or form tax professionals. If you are feeling overwhelmed, please reach out to your accountant or acquire one.
What is a tax deduction exactly?
A tax deduction is a deduction that lowers a person’s taxable income. Deductions incur from expenses that a person pays to keep operating their business during a financial year.
Tax deductions lower your tax liability by reducing your taxable income.
For an expense to be a tax deduction, it must’ve been for business use or a mix a personal and business. Records must be kept to
differentiate between the private and the business aspect of the travel (this is where you learn to become an excellent record keeper!).
NOTE: Your income must not be generated from a hobby and activities related to a hobby. It must only be generated from business activities.
If you need more information to determine whether or not your content creation is a business or a hobby, check out our post “Twitch as a Business“.
Travel expenses and tax deductions
A lot of content creators are considered to be small business owners (sole traders), therefore can claim expenses incurred travelling as a small business. Expenses can include the following:
- Flights – International and domestic
- Transfer fees getting you to the hotel-motel holiday inn. This includes buses, trams, trains, taxis, Uber rides, helicopters and private hire cars. Probably submarines too but don’t quote us on that.
- Accommodation – hotels, hostels, AirBnB etc.
- Meals that you need to pay for while you are away
- Car hire and the expenses associated with the cost of hiring a car (tolls, fuel and parking).
Things you can’t claim
There is an increasing concern that small businesses are not reporting their deductions correctly. So to ensure you don’t do this, there are a few things you need to remember you can’t claim as a deduction. These include:
- Sightseeing and theme park tickets – who doesn’t want to have a fantastic time on their boss. Oh, wait. You are the boss, and this one’s on you!
- Souvenirs for friends, family or yourself so no you can’t claim that spoon from Luna Park for your 95-year-old grandma.
- Entertainment of any kind! That includes that seedy nightclub that you’ve been eyeing off the last few nights.
- Visas, passports or travel insurance – these are all at your cost.
- Driving or parking-related fines from local councils – you do the crime, you pay the fine.
What you will need for your claim
You want your tax return to be legit right? To do this, you will need to keep an excellent track record of all the expenses that you are planning on claiming as a deduction. Keep in mind that you might need a copy of the following to provide as proof of the expense:
- Boarding passes – one thing you never thought you’d need again other than to use it as a bookmark for an impulse buy book at the airport.
- ALL Receipts and invoices for travel purchases.
- Travel diary – only if the travel was an extended period longer than six nights.
One application that you can use is Waveapps.com (smartphone browser-friendly) or the ATO Deductions app. Both have a place for storing images of your receipts and invoices and tracking the dates of the expenses.
Tips for claiming
During Melbourne International Games Week / PAX Australia/TwitchCon you will need to have a travel diary. A travel diary will need to have all the specific details of your trip, i.e. date of trip/activity, description of the activity and all receipts of the travel expenses. Aside from that, the travel diary also helps determine what part of the trip is personal and which part is business-related.
You can use our income expense tracker that has a Travel Diary tab. Let Player 2 HQ know if you have any questions, we are more than happy to help or refer you to the right people that can. There are many benefits to keeping track of your expenses. Especially being able to claim them as a tax deduction, potentially reducing the amount of tax you will have to pay!
Player 2 HQ are NOT TAX PROFESSIONALS so please be responsible and seek the help of a professional near you.
For more information check out the following links:
USA: IRS: 511 Business Travel Expenses
Australia: Claiming a tax deduction for business travel expenses
United Kingdom: Expenses if you’re self-employed
Canada: Business expenses