Let’s talk about tax (and yoga).
Now dear readers you may not realise but next to my family and friends there is nothing I love more than yoga. Well except maybe learning French, films, travel and … anyway you get the idea so work with me. And as this is a tax blog I thought I really should combine the two very early on.
A few years ago when I was both a runner and a Treasury official I was using yoga as a form of physical and mental carbon offset. One Sunday I was queuing up in a very calm mindful way to swipe my card. I was noticing my breathing and feeling very at one with the universe.
Ahead of me the yoga teacher for the class was checking us in. Now it seems to be a yoga studio thing for the teacher to do the pre class admin. I am coming around to this. On one level it is nice to be greeted by the teacher but at times it does seem like a lot for them to cope with. I guess that is part of why they are so special.
So here I am in the queue noticing but not really engaging with my surroundings as I was going internal. Until the teacher says to the person in front of me ‘here is your receipt as you’ll need it for your tax’.
Bong!! My left-brained self returned. What was that about? When I was a gym member no one ever said that. What is this ‘need it for your tax’ thing ?
Now dear readers who are also tax geeks you know where I am going with this. But a key piece of contextual information for non-yogis is that the yoga community is about the nicest kindest most peaceful community I have ever come across. They are definitely bottom of the triangle people.
For yogis who are not tax geeks I need also to provide some contextual information. In the tax system pretty much all forms of income are taxable: your yoga teaching; events you run for profit and your day job. Now that won’t be a surprise to anyone. The more difficult part is what you can claim as expenses. So it really does depend on whether or not you need that receipt for your tax.
Before I go on what I offer is my best advice which is wholly up to you whether you accept it. In the same way you tell me – from a place of your knowledge; experience ; and concern for my joint health – that I should micro bend my hyperextended joints and I don’t. I too offer this from a place of my knowledge; experience and concern that you could get to interact with my former colleagues outside your classes. Whether you follow it is completely up to you.
In the tax system, if you are not an employee, expenses related to the earning of that income are deductible if they are:
- Directly connected to the earning of the income or connected to the cost of running a business and
- not private or domestic expenses.
An example. I went back to work in 2000 as a junior official watching the winter of discontent when my boys were 5 and 2. I used pretty much all my post tax income to pay for a nanny without whom I could not go to work . But NONE – and I repeat NONE – of those costs were deductible as they were considered private or domestic expenses. Yes tax friends there is also the employment limitation but just let it flow – this is a yoga post after all.
Now all yogis know how life changing yoga is and not just for your joints so all yoga inherently has a private and domestic element to it. But then so does any occupation that has a personal or social benefit to it.
And here ‘occupation’ is key. If yoga teaching is ‘what you do’ then by definition you will have a dedicated home practice and so any classes you take or courses you go on will be personal development for your teaching and not your core personal practice. Therefore fully deductible for tax.
But part-time yoga teachers this is not you. If you have a day job and just teach a couple of classes a week, this does not mean that Wanderlust; that advanced training in Bali and your studio subscription is necessarily tax deductible. It will be tax deductible to the extent it isn’t a private expense.
Now sorting that out that deductible/non-deductible line in practice would be a total headfxxk. So I would suggest following the approach in Inland Revenue’s guidance on holiday houses before the Mixed Use Asset rules came in and claiming expenses up to the level of income earned from yoga teaching. There is no technical analysis on this point – strangely for the Office of the Chief Tax Counsel as they are all about the technical analysis – but to me they have applied the private limitation but not spelt that out as it is a headfxxk even for them.
So parttime yoga teachers – if it is personal development you can claim up to what you earn.
Oh and that other yoga special – Karma Cleaning. Barter is in the tax system. For the studio they are substituting taxable income for deductible cleaning costs so they net off. But for the cleaner it is taxable income paying for a non-deductible yoga class. So stick the value of each yoga class on your PTS and we’ll all be sweet.