Personal trainers are among the most structurally diverse small-business operators in Australia. Some are employed by gyms on a PAYG basis. Others operate as sole traders renting a booth or time slot from a facility. Many do both simultaneously — salaried shifts at one gym while building a private client base on the side. Each income type carries different bookkeeping and tax obligations, and conflating them creates problems that are costly to unwind at year end.
Sole Trader vs. Company Structure
Most personal trainers start as sole traders, and that structure works well until annual profit exceeds roughly $100,000. At that level, the 47% top marginal rate (including Medicare levy) starts to bite, and incorporating a company paying 25% corporate tax may offer a benefit — provided the funds are not immediately distributed as dividends taxed at the individual's rate.
Key considerations:
- A sole trader can claim all business expenses directly against income. Drawings are not expenses.
- A company must pay the owner a reasonable salary subject to PAYG withholding. The ATO's personal services income (PSI) rules in Part 2-42 of the Income Tax Assessment Act 1997 (ITAA 1997) may prevent income splitting through a company if 80% of the company's income comes from a single client (e.g., one gym).
- Professional indemnity and public liability insurance are deductible in either structure.
For most trainers in their early years, a sole trader ABN with a separate business bank account and meticulous expense tracking is sufficient.
Employment vs. Self-Employment Income
When a personal trainer is both employed by a gym and running their own client base, two income streams must be kept entirely separate:
Employment income (gym employment):
- Reported on the payment summary / income statement from the gym.
- Tax withheld at source under PAYG withholding — the trainer does not issue invoices to the gym.
- Superannuation contributions are the gym's obligation at the SGC rate (11.5% for 2025-26).
- Work-related deductions specific to this employment (required clothing, ATO-accepted equipment) are claimed in the individual's tax return at Item D.
Self-employed income (private clients):
- All fees invoiced to private clients are assessable income.
- If turnover exceeds the $75,000 GST registration threshold, the trainer must register for GST and charge 10% on services.
- Personal training services are taxable supplies — there is no health services exemption for fitness services under the GST Act (unlike physiotherapy or clinical exercise physiology delivered under specific referral pathways).
- Quarterly BAS lodgement applies once GST-registered.
Keeping separate bank accounts for the employed and self-employed income streams is not legally required but is strongly advisable — it makes ATO audit review far simpler and prevents inadvertent co-mingling.
Equipment Deductions
Equipment purchased for business use is deductible, either immediately (if eligible for the instant asset write-off) or depreciated over its effective life under Division 40 of the ITAA 1997.
Home gym equipment: Deductible only if the space is dedicated exclusively to business use and clients are seen there. A trainer who uses home equipment solely for personal maintenance cannot claim a deduction. If a room in the home is set aside as a studio with client sessions conducted there, a home office / studio deduction may apply — calculate using the actual cost method or the ATO's fixed-rate method (currently 70 cents per hour).
Business premises equipment: Fully deductible for the business-use percentage. A set of dumbbells owned by the business and used exclusively with paying clients is fully deductible.
Clothing: Compulsory uniform with a business logo registered with AusIndustry is deductible. Generic activewear — even if worn only during sessions — is not deductible as it is suitable for private use.
Travel Between Training Locations
A trainer who travels between multiple training locations during the working day can claim the cost of that travel using either the cents-per-kilometre method (2025-26 rate: 88 cents/km, up to 5,000 km) or the logbook method for higher deductions.
The ATO does not allow a deduction for travel between home and a regular place of work. However, if the trainer has a home office (satisfying the criteria above) as their base of operations, travel from home to the first client location and from the last location back home may be deductible. This requires the home office to be a genuine place of business, not merely a desk in a spare bedroom.
Maintain a travel log — a smartphone app that records odometer readings and trip purpose is sufficient for the logbook method and provides an auditable record.
Contractor Arrangements with Gyms
Some gyms engage personal trainers as independent contractors rather than employees. The bookkeeper's task is to confirm that this arrangement is genuine. The ATO's employee vs. contractor tests look at:
- Ability to subcontract or delegate
- Basis of payment (time vs. result)
- Who provides equipment
- Whether the worker can work for multiple businesses simultaneously
- Level of financial risk
Many gym contractor arrangements fail several of these tests, meaning the trainer is a deemed employee for PAYG withholding and superannuation purposes. The gym bears the primary compliance risk, but the trainer may also face unexpected tax bills if incorrect withholding causes an underpayment.
For payroll tax purposes, state revenue offices (particularly NSW, VIC, and QLD) apply look-through provisions that can aggregate contractor payments to a trainer working predominantly for one gym, bringing them within the employer's payroll tax base.
Professional Indemnity and Insurance
Professional indemnity and public liability insurance premiums are fully deductible as a business expense in the year they are paid (or accrued, depending on the accounting method). Income protection insurance premiums are also deductible for a self-employed trainer — though any payout is assessable income in the year of receipt.
Legislation and Further Reading
- Income Tax Assessment Act 1997, Div 40 (depreciation), Part 2-42 (personal services income)
- ATO PCG 2023/1 — employee vs. contractor determination
- ATO website — cents per kilometre rate (updated annually)
- ATO website — working from home deduction methods
- ATO Guide — Fitness industry tax and super information
- Payroll Tax Act (jurisdiction-specific) — contractor provisions