As a self-employed individual or small business owner in Australia, you’re always looking for ways to maximize your tax deductions. One question that often comes up is whether LinkedIn Premium membership fees are tax deductible. In this article, we’ll examine if and when LinkedIn Premium can be claimed as a tax deduction in Australia.
What is LinkedIn Premium?
LinkedIn Premium is LinkedIn’s paid subscription service that provides users with additional features beyond the free basic account. Some of the key benefits of LinkedIn Premium include:
- Seeing who has viewed your profile
- Contacting anyone through InMail even if you’re not connected
- Advanced profile and company page analytics
- Expanded search filters
- Unlimited profile recommendations
Premium memberships are available on monthly and annual payment plans. As of 2023, the monthly price is $54.99 AUD while the annual price is $468 AUD.
Tax deductibility of LinkedIn Premium
When it comes to claiming tax deductions in Australia, the key requirements are that the expense must be directly related to earning your assessable income and not be private in nature. LinkedIn Premium fees may potentially be deductible if the membership is used to help generate income in your profession or business.
Deductibility for employees
If you are an employee, the ATO is generally stricter when it comes to allowing deductions for LinkedIn Premium fees. The membership would typically be considered a private expense rather than an income-producing one. Exceptions may apply if you can demonstrate the membership:
- Is required by your employment contract
- Has a sufficiently strong connection to your current employment and duties
For instance, if your job involves recruiting through LinkedIn, the fees may be deductible. However, claiming deductions as an employee can be difficult unless your use of LinkedIn Premium is directly tied to your job.
Deductibility for self-employed and businesses
If you are self-employed or operate a small business, you generally have a stronger case for claiming LinkedIn Premium fees as tax deductions. Potential ways the membership could be deductible include:
- Networking with prospective new clients
- Marketing your professional services
- Generating business leads and sales
- Recruiting new employees
- Researching competitors
- Enhancing your professional reputation
Since LinkedIn Premium can help grow your business and income sources in a variety of ways, the fees are likely deductible as long as you can show a direct connection to earning your assessable income. It is advisable to keep records that demonstrate how you use LinkedIn Premium for business or work-related purposes.
In some cases, the fees may only be partially tax deductible. This can occur if you use LinkedIn Premium partially for business and partially for personal reasons. You can only claim deductions for the business-related portion. Keeping usage logs can help divide between deductible and non-deductible use.
Claiming the deduction
To claim LinkedIn Premium fees as a tax deduction in Australia:
- Keep invoices and receipts for all fees paid.
- Maintain records that show how the membership assisted your profession or business.
- Only claim the portion of fees that relates to income-producing purposes.
- When tax time comes, include the eligible amounts in your tax return deduction claims.
It is also advisable to confirm deductibility with your accountant if you are unsure. Having the proper documentation will be key should the ATO audit or review your deductions.
Here are some common scenarios and whether LinkedIn Premium is likely to be tax deductible:
|Mark uses Premium to network and find new accounting clients
|Sarah uses Premium to enhance her professional profile as a graphic designer
|John uses Premium to view who has looked at his profile out of personal interest
|Unlikely to be deductible
|Emily’s workplace provides Premium access as part of her employment contract
|Josh uses Premium for a mix of professional networking and job seeking
Maintaining tax compliance
As with claiming any deductions in Australia, it is important to remain compliant with tax law to avoid issues with the ATO. Key tips include:
- Only claim deductions for the portion of LinkedIn Premium fees that directly relate to earning assessable income.
- Keep detailed records such as usage logs to justify deductions if required.
- Be conservative and careful not to overclaim the amount used for work purposes.
- Review claims with your accountant if you are unsure of deductibility.
- Be transparent and disclose all claims on your tax return.
Claiming GST credits
If you are registered for GST, you may also be eligible to claim GST credits on the LinkedIn Premium fees in addition to income tax deductions. The percentage of GST credits depends on your business’s registration status and entitlements. Ensure you keep tax invoices to support GST credit claims.
In summary, LinkedIn Premium fees can potentially be claimed as tax deductions in Australia if the membership is used to generate assessable income in your profession or business. Employees face greater restrictions compared to self-employed taxpayers and businesses. Ensure you maintain thorough records, claim conservatively, and have receipts to substantiate deductions. With the right documentation and usage, the fees may provide a valuable tax deduction for many Australian taxpayers.