Tax & GST

Can personal trainers claim coffee?

There are four different coffees in a trainer's week and they don't share an answer. One is private. One runs straight into the entertainment rules. One is usually fine. One is covered by the travel rules and is the most generous of the lot. Here's which is which, and what the answer actually turns on.

Why this one is genuinely hard

Most deduction questions are answered by one test: did you spend the money to earn your income, and is it private in nature. Coffee is answered by three sets of rules stacked on top of each other, and they don't all point the same way.

1. The ordinary deduction test. The spend has to be genuinely incurred in earning your income, and not be private or domestic.
2. The entertainment provisions. Australian tax law contains a separate division dealing with entertainment — food, drink and recreation — which restricts deductions that would otherwise pass the ordinary test.
3. The travel rules. Being away from home overnight for work changes the character of meal and drink costs, and is dealt with separately again.

That's why you'll find a trainer who has been told their coffee is fine and a trainer who has been told it's never claimable, and both of them are repeating something true about a different situation.

Four coffees, four answers

1. Your own coffee, alone, between clients

This is the one most readers arrive wanting to argue about, and the argument is reasonable on its face. You finish a 6am, you've got fifty minutes before the next one, you're not going home, and the $5.40 is a direct consequence of how the work is structured.

The tax answer doesn't work that way. Food and drink that keeps you going is treated as private in nature — you'd eat and drink whatever you did for a living, and the fact that the timing is inconvenient doesn't change what the money bought. Australia has no general deduction for sustenance during an ordinary working day, however unordinary the hours feel.

Two things that don't move the needle, despite being said constantly: that you only bought it because you were between venues, and that you were sitting there writing programs. Neither changes the character of the coffee. If you genuinely rent workspace, that's a different expense with a different name.

2. Coffee for a client or a prospect

Here's where people are most confidently wrong. Buying a coffee for a client while you talk through their next block feels like the cheapest business development in existence, and it's hard to see who is being entertained by a takeaway flat white.

Australian tax law nonetheless treats a coffee bought for a client at a cafe as entertainment, dealt with by its own division of the income tax law (Division 32 of the Income Tax Assessment Act 1997). Not every provision of food and drink is entertainment — that's decided on what was provided, when, where and why, the same four factors that save the studio supplies below — but a cafe meeting sits squarely inside it.

Those provisions deny deductions for entertainment expenses, subject to a set of exceptions, and they sit on top of the ordinary tests rather than replacing them. So an expense can be genuinely business-motivated, pass the ordinary test comfortably, and still be denied.

The best-known exception applies where the expense is caught by fringe benefits tax, which is a system about benefits provided to employees. A sole trader with no staff, buying a coffee for a client, isn't in that territory. The division does hold other exceptions — seminars, businesses that sell entertainment for a living, entertainment provided to the public as advertising — but a coffee bought for one client or prospect reaches none of them, and calling the line item "advertising" changes nothing except how hard it is to explain later.

3. Tea, coffee and milk for your own studio

Different expense entirely, and a much better one. A tin of coffee, a box of tea, milk in the studio fridge and a stack of cups, bought for the space your clients actually train in and consumed on site during working hours, has the character of ordinary business running costs rather than taking someone out.

The factors that generally decide it are the ones above: what you provided, when, where, and why. Light refreshments, during working hours, on your own premises, incidental to the work is about as far from a long lunch as food and drink gets. Scale it up — catering a launch, putting on drinks, a function — and it starts sliding back toward entertainment.

The GST side is quieter than you'd expect. Basic groceries are often GST-free in Australia, so the milk and tea bags may never have carried GST to claim back in the first place. Check the receipt rather than assuming either way.

4. Coffee while you're away overnight for work

Fly to a conference, drive interstate for a two-day course, stay the night: meals and drinks while you're genuinely travelling away from home overnight for work are treated under the travel rules, not the everyday ones, and are generally deductible. This is the most favourable of the four scenarios, and worth capturing properly, because a certification weekend is a real cost.

What it needs: the travel has to be genuinely work-related, you have to actually be away overnight, and you need records. You may also have heard about set "reasonable amounts" for meals that remove the need for receipts. That shortcut is tied to receiving a travel allowance, which a sole trader paying their own way generally doesn't — so keep the actual receipts rather than relying on a per-day figure. For longer trips a travel diary can be required as well; check the current threshold before you go.

If you stayed on for the weekend, apportion. The work days are work; the beach day isn't.

The GST half is the easy half

Two separate questions hide inside "can I claim my coffee": whether you get an income tax deduction, and whether you get a GST credit. They're decided under different laws, but on this expense they're linked. Where a food-and-drink expense is non-deductible entertainment, GST law denies the credit as well.

So the practical answer for a cafe coffee is no credit, and that's true whether or not the coffee itself carried GST when you bought it. It's also why Momentum records coffee and light meals with no GST credit — the safe position, applied consistently, with no per-cup judgment calls at 6am.

Worth remembering more broadly: a valid tax invoice is required to claim a GST credit on purchases over $82.50 including GST. Coffee never gets near that, but the conference it was bought at might. More on GST for trainers →

What Momentum's coffee category actually means

Momentum has a category called Coffee & Light Meals. It's set to out-of-scope for GST — no credit — and to 0% business use, so a coffee is recorded as money out of the business without producing a deduction.

That's deliberately the conservative setting, and it matches this page. An earlier version of the app treated the category as fully deductible, following a chart of accounts built for one Australian training business. It was changed because a default that suits one business's facts is the wrong thing to ship to everyone else's — and because if you're going to be wrong about a deduction, being wrong in the direction of claiming less is the cheaper mistake.

You can still override it per expense. If your agent takes a different view of a particular coffee — a genuine studio supply, or one bought while you were away overnight for work — set the business-use percentage on that row and Momentum will use your number, not its default.

One practical note: the coffee category is for the everyday cup. Meals and drinks on a trip away overnight belong in Travel, which is set up to carry GST, so the conference flat white isn't treated the same way as the one between clients.

What to actually do about it

You're standing at a counter with forty seconds before your next client. You are not going to resolve Division 32 there. What you can do is make the question answerable later, which is the whole job.

• Keep the receipt. Photograph it at the counter, not at home. Cafe receipts are thermal paper and can be blank inside a year.
• Write who and why, in one line, at the time. "Coffee with Sam K, scoping 12-week block" is a record. A bank line reading CAFE 5.40 in November is a mystery you'll be reconstructing from memory.
• Keep your own coffee separate from client coffee separate from studio supplies. They're three different expenses with three different answers. Merged into one total, they have to be untangled by hand.
• Let your agent make the call at year end. That's what they're for, and they're deciding on facts you've already captured rather than facts you're guessing at.

The asymmetry is what should decide your behaviour. Keeping the record costs you three seconds and might be worth nothing. Not keeping it removes the option entirely — an expense with no record can't be claimed even when it was always claimable, and can't be defended if it's questioned.

Common questions