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Is Business Coaching Tax-Deductible in Australia? (ATO Rules 2025)

If you’re considering hiring a business coach in Sydney, one question you should ask is: can I claim this on tax? The answer is good news for most business owners: yes, business coaching fees are generally tax-deductible in Australia. But there are important details and distinctions you need to understand to claim correctly.

This guide explains the ATO rules on business coaching deductibility, what qualifies versus what doesn’t, how to claim coaching expenses properly, and how much tax deductibility actually reduces your cost.

The Short Answer: Yes, Business Coaching Is Tax-Deductible

Business coaching is normally tax-deductible in Australia because business coaching contributes directly to earning more income. The Australian Taxation Office allows deductions for expenses that have a direct connection to earning your business income, and professional development that improves your business performance fits this category.

This means the coaching fees you pay to improve your leadership, build better teams, increase profit, or grow your business can typically be claimed as a business expense. For sole traders, this goes on your individual tax return. For companies, it’s a business expense.

However, the key distinction is that the coaching must relate to your business. General life coaching, personal development that doesn’t connect to business performance, or coaching for hobbies isn’t deductible.

What the ATO Says About Coaching and Self-Education Expenses

The ATO’s position on self-education and professional development is outlined in Taxation Ruling TR 98/9. The key principle is that expenses are deductible if they have a sufficient connection to your current income-earning activities.

The ATO states: “If a course of study is too general in terms of the taxpayer’s current income-earning activities, the necessary connection between the self-education expense and the income-earning activity does not exist.” This means the coaching needs to be specific enough to relate to how you currently earn income.

For business owners, this is usually straightforward. If you own a business and you hire a coach to help you improve business performance, build better teams, increase sales, or strengthen operations, that clearly connects to earning your business income. The coaching is deductible.

For employees, the rules are slightly different. You can claim deductions for seminars, conferences, or coaching that maintains or increases the knowledge and skills you need in your current employment. But it has to relate to your current job, not preparing for a new career.

Business Coaching vs Life Coaching: The Critical Distinction

The ATO draws a line between business coaching and life coaching, and only business coaching is typically deductible. Here’s how to tell the difference.

Business Coaching (Usually Deductible)

Business coaching focused on these areas is normally tax-deductible: improving business performance and profitability, leadership and management development, team building and delegation skills, sales and marketing strategy, financial management and planning, operational efficiency, or strategic planning and growth.

If the coaching is explicitly about making you better at running your business and increasing business income, it qualifies. BGB’s coaching focused on building teams, systems, and owner extraction clearly falls into business coaching that relates directly to business income.

Life Coaching (Generally Not Deductible)

Life coaching focused on these areas is generally not tax-deductible: personal relationships and family issues, general wellbeing and happiness, work-life balance (unless it directly impacts business performance), personal goals unrelated to business, health and fitness (unless required for your business), or general self-improvement without business application.

The cost of self-improvement or personal development courses is generally not allowed according to ATO guidance, although exceptions exist in certain circumstances. If the coaching is primarily about your personal life rather than business performance, it’s not deductible.

The Grey Area: What About Coaching That Covers Both?

Some coaching addresses both business and personal development. For example, coaching on time management might help you run your business better and also improve your personal life. Or coaching on communication skills might help with both business relationships and personal ones.

In these grey areas, the ATO looks at the primary purpose. If the main purpose is business improvement and any personal benefit is incidental, it’s likely deductible. If the main purpose is personal development and business benefit is secondary, it’s probably not deductible.

When in doubt, focus your coaching on clearly business-related outcomes and document that in your agreement with your coach. If your coaching programme is explicitly about “building a high-performing team” or “increasing business profit,” that’s clearly deductible. If it’s about “finding your purpose” or “achieving life balance,” that’s less clear.

How Much Does Tax Deductibility Actually Save You?

Tax deductibility reduces the after-tax cost of coaching by your marginal tax rate. Here’s what that means in practice for Sydney business owners.

If you pay $2,000/month for business coaching ($24,000/year) and your marginal tax rate is 30%, the tax deduction saves you $7,200 in tax. Your after-tax cost is $16,800. If your marginal rate is 37%, the deduction saves you $8,880, making your after-tax cost $15,120.

For business owners in higher tax brackets (39% or 45% marginal rate), the savings are even more significant. At 45%, a $24,000 coaching investment costs you $13,200 after tax when you factor in the deduction.

This makes the real cost of coaching significantly lower than the headline price. A $3,000/month programme that seems expensive is actually $1,650-1,800/month after tax for someone in a high tax bracket. That changes the value proposition considerably.

How to Claim Business Coaching Expenses Correctly

To claim business coaching fees as a tax deduction, follow these steps.

Keep Detailed Records

Maintain invoices and receipts from your coach, contracts or agreements showing what the coaching covers, and notes documenting how the coaching relates to your business. Good record-keeping is essential for any tax deduction. The ATO can ask you to prove that expenses you’ve claimed are legitimate, so you need documentation.

Categorise Correctly

For sole traders, coaching expenses typically go under “other business expenses” or “professional development” on your tax return. For companies, they’re an operating expense. Make sure your accountant knows what the expenses are for so they can categorise correctly.

Be Clear on Business Purpose

Your coaching invoices should clearly indicate that the coaching relates to business. If the coach’s invoice says “leadership coaching for [Your Business Name]” or “business performance coaching,” that’s clear. If it just says “coaching services” without context, that’s less clear.

At BGB, our invoices clearly state business coaching services, making it straightforward for clients to claim as a business expense.

Don’t Mix Business and Personal

If you engage in both business coaching and personal life coaching with the same person, keep separate invoices and agreements. Only claim the business coaching portion. Don’t try to claim personal coaching as business expense—that’s asking for trouble if you’re audited.

Consult Your Accountant

Tax rules can be complex and individual circumstances vary. Before you claim coaching expenses, run it past your accountant. They can confirm that your specific coaching engagement qualifies as deductible and advise on the best way to structure and claim it.

The standard advice from coaching providers and tax professionals is: “Before you put down your coaching costs as deductible expenses, check with your accountant.” This is smart practice. Don’t rely solely on general information (like this article)—get advice specific to your situation.

Special Considerations for Different Business Structures

How you claim coaching expenses varies slightly depending on your business structure.

Sole Traders

Sole traders claim coaching expenses on their personal tax return as a business expense. The deduction reduces your taxable income, which saves tax at your marginal rate. Make sure the coaching clearly relates to your business (not personal development) to support the deduction.

Companies

For companies, coaching expenses are a business expense that reduces company taxable income. If the company pays for coaching for the owner/director, ensure there’s clear business purpose. If it’s structured as a fringe benefit, different tax treatment might apply, so discuss with your accountant.

Partnerships and Trusts

Similar principles apply: the coaching must relate to the business activities. The deduction flows through to the partners or beneficiaries based on their share of income/expenses.

Common Questions About Coaching Tax Deductibility

Can I claim coaching if I’m an employee (not business owner)? Yes, if the coaching relates directly to your current job. You can claim deductions for training and seminars that maintain or improve skills for your current employment. But coaching to prepare for a different career or promotion to a new role is not deductible.

What if I’m not making profit yet? You can still claim business expenses (including coaching) even if your business is making a loss. Those expenses reduce your taxable income (or increase your loss, which might be carried forward). The key is that you’re running a legitimate business, not just a hobby.

Can I claim coaching if I’m starting a business? This gets murky. Expenses incurred before you actually start operating can be trickier to claim. Once your business is operating, coaching to improve it is clearly deductible. If you’re still in the planning phase, discuss with your accountant.

What about executive coaching paid for by my employer? If your employer pays for your coaching, that’s a business expense for them. You don’t claim it (since you didn’t pay it). There might be fringe benefits tax implications for the employer, but that’s their issue, not yours.

The Bottom Line: Yes, Claim It (Correctly)

Business coaching fees are tax-deductible in Australia when the coaching relates directly to your business performance and income. This tax deductibility reduces the after-tax cost significantly—often by 30-45% depending on your marginal rate.

To claim correctly, keep good records, ensure your coaching is clearly business-related (not general life coaching), categorise the expenses appropriately, and consult your accountant to confirm your specific situation. Don’t let tax treatment be the main reason you hire or don’t hire a coach—focus on the value and ROI. But do take advantage of the deduction when you invest in business coaching that helps you grow.

Book a Quick Fit Call with BGB and we’ll ensure you have the documentation you need to claim coaching as a business expense.

Related Reading:

• How Much Does Business Coaching Cost in Sydney?

• How to Budget for a Business Coach

• Is Business Coaching Worth the Investment?

• ATO Taxation Ruling TR 98/9 on self-education expenses

• ATO guidance on deductions for business and employees

• Professional tax advisor consultations