To be fully tax-deductible, your coach should only advise you on business matters. However, if your coach is a life coach, a coach who advises you on both business and personal matters, only the business portion of your fee will be tax-deductible. Did you hire an efficiency expert to give you tips on time management? Or an expert in public speaking to help you speak in public? According to Weltman, whenever you can argue that the advice was appropriate and useful for your company, you should be able to deduct the fee. However, there are gray areas when it comes to professionals (such as business coaches) who offer a combination of personal and work-related advice.
In those cases, use common sense; if a coach focuses on personal issues, don't claim it as a business deduction, he says. An exception is when a family business uses a consultant to resolve disagreements between siblings or other tense family relationships that hinder the management of the company. Those charges are usually deductible, he says. Your investment in professional or executive coaching may be tax-deductible.
It's a resounding example, so be sure to discuss your specific situation with a tax professional. If business coaching is used to train and develop employees, it is likely to fall into the category of training and development expenses. This would be the case if the training is used to improve the skills or knowledge of employees in specific areas. Based on this subtle distinction, executive coaching is most likely a deductible work-related expense, but professional coaching may not qualify as such.
For example, if you purchase business advice and consulting for your RTO, you can request a deduction for the full price of the advice. When it comes to making deductions, most business owners are well aware of the expenses that the Internal Revenue Service considers “ordinary and necessary for businesses.” They are all teaching and training resources that help you grow your business and grow as a business owner. There is no definitive answer to this question, since the business coaching spending category will depend on the specific business and the use of coaching. It's up to you to substantiate a direct relationship between your current employment and training expenses.
If business advice is provided by a professional services provider, it is likely to fall into the category of professional services expenses.