Are Membership Fees Tax Deductible?

Are you a member of an organisation and worried whether your membership fee is tax deductible or not? No worries, you jumped to the right place because this article will cover all your doubts related to the taxation of membership fees. Here is some good news! The membership fee is tax deductible because it is a work-related expense.

    Why is a membership fee tax deductible?

    A membership fee is considered a work-related expense therefore it is tax deductible. When an individual becomes a member of an association or trade union, these organizations work for:

    • negotiating with the employer on behalf of the employee,
    • providing a safe and healthy work environment,
    • employee rights and skill development,
    • providing legal advice.

    In Australia the expenses incurred for generating income and professional skill development are tax deductible because the government of Australia aims for professional development and networking, ensuring access to necessary resources and providing job-related education. This will ultimately benefit the economy by having a skilled and knowledgeable workforce.

    Eligibility for tax deductibility

    As per ATO criteria, the membership fee will be tax deductible if it is directly related to a person’s employment and is specifically incurred for producing assessable income. An individual can claim a tax deduction, for

    1. Union fees

    The membership fee paid to trade unions is tax deductible as long as an individual is a member of the trade union because they are work-related expenses. Trade unions are essential bodies for protecting employee rights, improving the workplace, higher wages, working conditions

    2. Professional Associations

    The membership fee paid to associations is tax deductible if membership is related to an individual’s profession. The membership should result in professional development, networking opportunities, and enhancement of skills.

    3. Documentation and record keeping:

    To claim the membership fee as a tax-deductible it is necessary to keep proper documents and records related to payment of membership fee. This may include any invoice, receipt, or any letter received from the organization. These documents and records serve as evidence of membership fee payment during tax returns.

    How much of the membership fee is tax deductible?

    The tax deductibility on membership fees depends on the nature of the membership. If the membership with a professional association or trade union is directly related to your employment, it will be fully deductible. However, membership with associations or trade unions that are not directly related to employment is deductible up to $42 only.

    How to claim membership fees as a tax deduction

    The membership fee paid can be claimed as tax deductible by following some easy but important steps:

    1. Determining eligibility: The membership fee which is directly related to employment is eligible for the full deduction.
    2. Maintaining required records: proper record keeping is key for obtaining a claim. Therefore make sure to keep records such as invoices or receipts of the amount paid, any letter from the organization, bank statement, or any other document that supports your payment.
    3. Complete your tax return: At the time of lodging your tax return make sure you have all the necessary documents available to claim your tax deduction. 

    The process of claiming tax deductions can be complicated so it’s advisable to seek the services of a professional accountant or tax agent if you are unaware of the process or you have some complex tax situations.

    Membership fee paid to professional associations and trade unions is tax deductible because it is a work-related expense. However, there are certain conditions to be met to claim this tax deduction which includes; the membership is directly related to employment, the individual should have proper documents showcasing the fee paid, and claiming the membership fee in the correct financial year. It is essential to seek advice from professional accountants if there is any confusion in the progress of successfully receiving a claim.

      This article is for general information only. It does not make recommendations nor does it provide advice to address your personal circumstances. To make an informed decision, always contact a registered tax professional.

      Share This