Tax Guide for Hairdressers and Beauty Professionals

Welcome to your no-nonsense financial guide for the Australian beauty industry. Whether you're a freelance makeup artist juggling gigs, a mobile hairdresser on the go, or a busy salon owner, getting a handle on your taxes isn't just a chore—it's key to your success. We're here to break down the essentials in simple terms, showing you exactly how to report your income and claim every single deduction you're entitled to.

Your Essential Guide to Hairdressers and Beauty Industry Taxes

The Australian hairdressing and beauty scene is a massive, bustling part of our economy. If you're thinking about how to start a beauty business in this vibrant space, understanding the money side of things is non-negotiable. This isn't a small-time industry; it was recently valued at around $3.9 billion AUD and keeps tens of thousands of skilled professionals like you busy.

This guide is your roadmap for navigating your obligations with the Australian Taxation Office (ATO). Our goal is to empower Hairdressers and Beauty Professionals like you to not only stay compliant but to legally trim your tax bill and keep more of your hard-earned cash.

Why Does Tax Compliance Actually Matter?

Let’s be real. When you're managing clients, appointments, and ordering stock, bookkeeping is probably the last thing on your mind. But getting your taxes right from day one is the foundation of a healthy, profitable business.

Here's a quick look at why it's so important to stay on top of your tax responsibilities.

Responsibility Area	Key Action Required
Avoiding Penalties	Submit your tax returns accurately and on time to avoid fines from the ATO.
Maximising Your Refund	Know what you can claim so you don't miss out on valuable deductions.
Financial Health Check	Use your financial records to get a clear picture of how your business is performing.
Building for Growth	Strong financial habits are the bedrock of any successful, long-term business.

Getting this right means you can focus on what you do best—making your clients look and feel amazing.

This guide is designed to be your go-to resource. We'll simplify the tricky topics into easy, actionable steps. We'll cover everything from declaring all your income (yes, even those cash payments and tips!) to spotting every work-related expense you can possibly claim.

Think of it this way: understanding your tax obligations isn't just about ticking boxes for the government. It's about taking full control of your financial future. When you're organised and informed, tax time stops being a stressful deadline and becomes a chance to check your business's pulse and plan your next move.

We’ll walk through key areas like Goods and Services Tax (GST), your superannuation duties, and the smartest ways to keep records. It doesn’t matter if you’re an employee, renting a chair, or running a full-blown salon—this guide will give you the confidence to manage your tax affairs like a pro.

Declaring Your Income and Navigating GST

A clean workspace, just like your tax records should be — organized and stress-free.

As a hairdresser or beauty pro, your income is way more than just what the EFTPOS machine spits out at the end of the day. To keep the Australian Taxation Office (ATO) happy, you need to declare every single dollar you earn. This goes beyond your standard service fees and covers all the different ways money flows into your business.

Think of it like this: your total income is a full financial picture of your hard work. That means you have to account for cash payments, those lovely tips from happy clients, and even the income you get from renting a chair to another stylist. Forgetting these "extras" can cause headaches later on, so being thorough from the get-go is your best bet.

Getting your income reporting right isn't just about ticking boxes for the ATO; it's about building a solid, sustainable business. Clean, accurate records mean you pay the right amount of tax and, just as importantly, you get a crystal-clear view of how your business is really performing.

What Counts as Assessable Income

The ATO calls any money you receive from your business activities assessable income. For Hairdressers and Beauty Professionals, this is a pretty broad umbrella that covers more than you might first think. It’s absolutely vital to track everything to make sure your tax return is spot on.

Here’s a rundown of common income sources you must declare:

• Service Fees: This is the obvious one – all payments from clients for cuts, styling, colouring, manis, facials, makeup, and any other treatments you offer.

• Cash Payments: It’s so important to record every cash-in-hand payment. The ATO keeps a close eye on the cash economy, so diligent record-keeping here is non-negotiable.

• Tips and Gratuities: Yep, any tips you receive from clients are considered income and need to be declared.

• Product Sales: The revenue from selling shampoo, conditioner, styling products, skincare, or makeup to your clients all counts.

• Chair or Space Rental: If you own a salon and rent out a chair or a room to another professional, that rental income has to be reported.

• Government Grants or Payments: Any business support you’ve received, like COVID-19 grants or other government assistance, is generally taxable.

Keeping a running log of these income streams throughout the year will make tax time a whole lot less stressful.

Understanding Goods and Services Tax (GST)

One of the biggest financial steps for any growing business in Australia is registering for the Goods and Services Tax (GST). It might sound intimidating, but it’s a standard part of running a successful operation.

The key thing to remember is this: GST isn't an extra cost to your business. It's a 10% tax you collect for the government from your customers. You then get to claim back the GST you've paid on your own business purchases.

You are legally required to register for GST once your business's gross income (that’s before taking out any expenses) hits or is likely to hit the $75,000 threshold in any 12-month period. Once you're registered, you have to add a 10% GST charge to your prices.

So, if you charge $100 for a service, you’ll add $10 for GST, making the total price for the client $110. You then report and pay this collected GST to the ATO, usually every quarter, through your Business Activity Statement (BAS).

The good news? You can also claim GST credits. This means you get back the GST portion of what you’ve paid on business-related buys, like stock, new equipment, your salon rent, and utilities. Getting your head around GST is a fundamental skill for any thriving beauty professional.

Your Complete Checklist of Tax Deductions

Claiming tax deductions is your secret weapon for shrinking your tax bill. Think of it as the Australian Taxation Office (ATO) giving you a nod for the money you have to spend to earn your income. For hairdressers and beauty professionals, the list of what you can claim is surprisingly long, covering everything from the scissors in your hand to the courses that keep your skills cutting-edge.

Before you start adding things up, you need to know the ATO’s three golden rules. To claim any work-related expense, you must tick all three boxes:

1. You had to spend the money yourself and didn't get reimbursed.

2. The expense must be directly linked to earning your income.

3. You must have a record (like a receipt) to prove it.

Use this checklist as your guide. It's designed to help you spot every single deduction you're entitled to, making sure you get the best possible tax return.

Client consultations are more than style—they’re a key part of your business workflow.

Sometimes just thinking about your day-to-day—from client consultations to managing your appointments—can highlight expenses you might have missed. Things like booking software, your work phone, and online courses are all part of the modern industry and often come with deductible costs.

To help you get started, here is a breakdown of the most common deductions you can claim, with examples and tips on what records you'll need to keep.

Common Deductions for Hair and Beauty Professionals

Expense Category	Examples	Record Keeping Note
Tools & Equipment	Scissors, clippers, hair dryers, straighteners, waxing pots, nail lamps, trolleys, salon furniture.	Keep receipts for all purchases. For items over $300, you'll claim depreciation over time.
Products & Supplies	Shampoos, conditioners, hair colour, styling products, skincare, makeup, nail polishes, wax, gloves, cotton pads.	Keep all invoices and receipts. A simple spreadsheet updated monthly can make this a breeze at tax time.
Clothing & Uniforms	Compulsory branded uniforms, protective aprons, non-slip shoes, safety glasses.	Receipts for purchase and cleaning. Note: Plain clothing (e.g., black pants) is not claimable.
Education & Training	Short courses on new techniques, industry seminars, TAFE courses, subscriptions to trade magazines.	Keep receipts for course fees, travel, and materials. The course must relate directly to your current job.
Travel & Car	Driving between jobs, visiting clients' homes, or picking up supplies.	Use the cents per kilometre method (up to 5,000 km) or a logbook to track work-related travel.
Phone & Internet	The portion of your personal phone and internet bills used for work (e.g., taking bookings, social media).	Keep a 4-week diary to work out your percentage of work use, then apply it to your yearly bills.
Other Expenses	Union fees, professional association memberships, home office expenses (if you do admin from home).	Keep all statements and receipts. The ATO has a simple fixed-rate method for home office claims.

Let's dive a little deeper into some of these categories so you're crystal clear on what's what.

Tools and Equipment Deductions

Your tools are the heart of what you do. Any equipment you buy for your job is almost always tax-deductible, including the initial purchase and any repair or maintenance costs.

This covers:

• Scissors, Clippers, and Razors: The cost of buying them and getting them sharpened is 100% deductible.

• Hair Dryers, Straighteners, and Curling Wands: All those essential styling tools can be claimed.

• Beauty Equipment: Think eyelash extension kits, waxing pots, spray tan machines, and nail lamps.

• Trolleys, Basins, and Salon Furniture: Even larger items you use to serve clients are claimable.

Here’s the rule of thumb: for any single item that costs $300 or less, you can claim the full amount right away. If it costs more than $300, you’ll claim its decline in value (depreciation) over a few years.

Products and Supplies

The products you use on clients are a huge business expense. Good news—you can claim the cost of every single supply you use in your daily work.

That means things like:

• Shampoos, conditioners, and treatments

• Hair colour, bleach, and developers

• Styling products like hairspray, mousse, and gels

• Skincare products, makeup, and cosmetics

• Nail polishes, acrylics, and gels

• Waxes, lotions, and disposables like cotton pads and gloves

The trick here is to be meticulous with your records. A simple spreadsheet or accounting software will make your life so much easier when it's time to add everything up.

Protective Clothing and Uniforms

You can claim a deduction for buying, renting, or cleaning a uniform, but only if it’s specific to your job. That usually means it has to have your employer’s logo permanently attached.

What’s often more relevant for our industry is protective gear. You can claim items designed to keep you safe or stop your regular clothes from getting ruined.

This includes:

• Compulsory work uniforms with a logo

• Aprons

• Protective glasses or goggles

• Gloves

• Non-slip shoes designed for salon floors

One thing to remember: you can’t claim the cost of plain clothes, like a standard black t-shirt or black pants, even if your boss tells you to wear them.

Self-Education and Training Expenses

The hair and beauty world changes fast. New trends, new techniques—it never stops. Investing in your skills isn’t just great for your career; it’s also a tax deduction. You can claim self-education costs as long as the course relates directly to your current job and helps you maintain or improve your skills.

Think about courses like:

• Short workshops on new balayage or cutting techniques.

• Advanced training in cosmetic tattooing or skincare treatments.

• Industry conferences and seminars.

• TAFE or university courses that are directly relevant to your profession.

Staying on top of your game is crucial. The Australian hair care market alone was valued at 1.3 billion USD in 2024 and is expected to hit 2.0 billion USD by 2033. This growth is all about new, specialised, and eco-friendly products. Education is what keeps you competitive.

Other Common Deductions

It’s often the small, forgotten expenses that add up. Don't leave money on the table by overlooking these common claims:

• Car Expenses: Do you travel between different salon locations, visit clients at home, or run out to buy supplies? You can claim your car expenses. The ATO lets you use either the simple cents per kilometre method or the more detailed logbook method.

• Phone and Internet: You can claim the work-related portion of your phone and internet bills. To figure this out, you just need to keep a record for a typical four-week period to calculate your percentage of work use.

• Subscriptions and Memberships: That subscription to Hairdresser's Journal or your annual membership to a professional association? It’s deductible.

• Home Office Expenses: If you do your admin, manage bookings, or update your social media from home, you can claim a portion of your home office running costs. The ATO offers a straightforward fixed-rate method to make this claim easy.

Mastering Record Keeping for a Stress-Free Tax Time

Let’s be honest, record keeping is probably the last thing on your mind after a long day of back-to-back clients. But having a simple system is your secret weapon for a stress-free tax season. Instead of that frantic, last-minute shoebox scramble, building good habits year-round turns tax time from a nightmare into just another smooth business process.

Think of your records as the evidence that backs up your financial story for the Australian Taxation Office (ATO). Solid proof means you can confidently claim every single deduction you're entitled to. It ensures you report your income accurately, stay compliant, and avoid that sinking feeling of dread when July rolls around.

Why Meticulous Records Matter

For hairdressers and beauty professionals, keeping detailed records isn't just about ticking boxes for the ATO. It's about having a real-time snapshot of your business's financial health, which empowers you to make smarter, more profitable decisions all year long.

This clear financial picture helps you track your cash flow, pinpoint which services are actually making you the most money, and get your expenses under control. Good record keeping is the foundation of a healthy business, and a key part of that is understanding the general ledger in accounting—which is basically the master file for all your financial transactions.

Having a strong financial foundation has never been more important. The Australian hair and beauty industry saw an estimated market growth of +2.145% in the first quarter of 2025, driven by incredible client loyalty. Whether you're a solo operator smashing it with client spend or a salon focused on bringing in new faces, accurate records are your key to navigating this growth.

What You Absolutely Need to Keep

The ATO has a clear list of records you need to keep to prove your income and expenses. These documents are your proof, so you need to be able to show them if they ever ask.

Here’s your essential record-keeping checklist:

• Proof of Income: This is everything from your EFTPOS or booking system sales summaries, bank statements showing deposits, any records of cash sales, and copies of invoices you've sent out.

• Proof of Expenses: Hold onto all tax invoices and receipts for business purchases. For those small cash purchases under $10 where you didn't get a receipt (like a coffee for a client meeting), just jot down the cost, date, and what it was for in a diary.

• Logbooks: If you're claiming actual car expenses, a logbook is non-negotiable. You’ll need to track your work-related kilometres for a continuous 12-week period.

• Asset Records: For any big-ticket items costing over $300 (like a new basin chair or a high-end styling tool), you need to keep the purchase records to calculate its depreciation over time.

ATO Golden Rule: You must keep most records for at least five years from the date you lodge your tax return. This ensures you’re covered if the ATO ever needs to review your claims from previous years.

Digital Tools to Make Your Life Easier

Thank goodness we're past the days of manual ledgers and overflowing filing cabinets. Modern digital tools can automate a huge chunk of the record-keeping process, saving you a massive amount of time and cutting down on human error.

Seriously, consider getting one of these on your team:

1. Accounting Software: Programs like Xero, QuickBooks, or MYOB are built for small businesses like yours. They can link directly to your business bank account, automatically sort income and expenses, track GST, and spit out financial reports with just a few clicks.

2. Receipt-Scanning Apps: An app like the ATO's own myDeductions tool is a game-changer. Just snap a photo of a receipt with your phone, and the app digitises the info and stores it securely. No more worrying about lost or faded thermal paper!

3. A Dedicated Business Bank Account: This is one of the simplest but most powerful habits you can build. Keeping your business and personal finances separate makes tracking your business income and expenses incredibly straightforward and clean.

By embracing these simple practices and tools, you can turn record keeping from a chore into a powerful business asset. You’ll not only stay on the right side of the ATO but also gain priceless insights that help steer your business toward bigger and better things.

Understanding Your Superannuation Obligations

Beyond the buzz of the hairdryer and the focus on flawless client service, superannuation is a non-negotiable part of your financial world as a Hairdresser or Beauty Professional. It’s a crucial piece of the puzzle, whether you're running a salon with a team or carefully planning for your own future.

For employers, it's a legal duty. For sole traders, it's the key to a comfortable retirement. Let's break it down.

Superannuation for Salon Owners with Employees

The current SG rate for the 2024-2025 financial year is 11.5%. This figure is scheduled to rise bit by bit until it hits 12% in July 2025. Missing these quarterly payments or getting the amount wrong can attract hefty penalties from the ATO, so it’s vital to stay on top of it.

Navigating Super for Contractors

This is where things can get a bit tricky for salon owners. Figuring out super obligations for contractors isn't as simple as checking if they have an ABN.

The ATO has very specific rules. Even if you hire a stylist on a contract basis, you might still have to pay their super. The deciding factor is whether the contract is wholly or principally for their labour.

Basically, if you're paying them mainly for their personal skills and the work they do with their own hands, the ATO will likely see them as an employee for super purposes. If you're unsure about a contractor, it's always best to get professional advice.

Superannuation for Sole Traders

When you work for yourself, there's no boss paying super into your account. That responsibility rests squarely on your shoulders. While it isn't compulsory for sole traders to pay themselves super, it’s honestly one of the smartest financial decisions you can make.

Think of personal super contributions as paying your future self first. It's a disciplined way to build long-term wealth that you’ll be grateful for when you decide to hang up your scissors.

Making your own super contributions comes with two massive perks:

1. Building Your Retirement Savings: Your money gets invested in a tax-friendly environment, giving it the perfect conditions to grow throughout your career. It’s incredibly motivating to check your super balance and watch it climb.

2. Claiming a Tax Deduction: In most situations, you can claim a tax deduction for the personal super contributions you make. This reduces your taxable income for the year, meaning you pay less tax right now while saving for your future. It's a win-win.

A simple but effective strategy is to set up regular, automatic payments to your super fund. Thanks to the magic of compound interest, even small, consistent contributions can snowball into a very healthy sum over time. This proactive approach ensures you're not just building a thriving business today, but also locking in a secure and comfortable future.

How to Lodge Your Tax Return Confidently

After a year of carefully tracking everything, it’s finally time to lodge your tax return. For many Hairdressers and Beauty Professionals, this last step can feel a bit daunting, but if you’ve kept good records, you can tackle it with confidence. Think of it as the final, satisfying snip after a long haircut.

Lodging simply means pulling all your documents together, deciding on the best way to submit them, and getting everything over to the Australian Taxation Office (ATO). Nailing this part ensures you’ve met your obligations and get any refund you're owed without delay.

Key Deadlines to Remember

The big date to circle on your calendar is 31 October. If you’re planning to lodge your own tax return, you absolutely must get it submitted by this deadline to avoid any late lodgement penalties from the ATO.

However, there’s a bit of wiggle room. If you work with a registered tax agent, the due date is usually much later, often extending well into the next year. This is one of the biggest perks of using a professional—it buys you precious time to get your ducks in a row.

Your Lodging Options

When it comes to lodging, you have two main paths to choose from. Each has its pros and cons, and the right choice really depends on how complex your financial situation is.

• Lodge Yourself with myTax: The ATO's online tool, myTax, is a decent option if your tax affairs are pretty straightforward. It can pre-fill some information from your employer and bank, which is handy. But once you throw in business income, a long list of deductions, or GST, it can get complicated fast. And remember, you're the one on the hook for every single detail being correct.

• Use a Registered Tax Agent: For most business owners, partnering with a tax agent is a no-brainer. They know the tax laws inside and out, making sure your return is spot-on and that you’ve claimed every last deduction you're entitled to. A good agent will often find claims you didn't even know existed, potentially boosting your refund by more than their fee.

Working with a tax pro isn’t just about ticking boxes for the ATO; it’s a smart investment in your business. They offer peace of mind, expert advice, and can often find you a much bigger refund than you’d manage on your own.

In the end, whether you go DIY or call in an expert, preparation is everything. For a more detailed walkthrough, our guide on how to file taxes in Australia breaks down each step. It's a great resource for figuring out which documents you need and what happens after you hit 'submit', helping you turn tax-time stress into a feeling of accomplishment.

Bringing It All Together: Final Steps and Expert Support

We’ve covered a lot of ground on the financial essentials for hairdressers and beauty professionals. Getting a solid handle on these concepts does more than just tick boxes for the tax office—it builds a stronger, more profitable business and lets you focus on what you love: making your clients look and feel amazing.

Think of it this way: consistent income tracking, claiming every deduction you're entitled to, keeping neat records, and hitting your lodgement and super deadlines are the foundations of a healthy financial future. A little organisation throughout the year is the secret weapon for a stress-free tax time.

Gearing Up for a Smooth Lodgement

As the end of the financial year gets closer, it's time for one final check to make sure nothing has slipped through the cracks. This is the perfect moment to pull all your records together in one place, which makes lodging your return a completely seamless process.

To help you out, we’ve put together a detailed guide. You can find everything you need to have ready right here in our comprehensive tax return checklist.

Remember, smart tax management isn't just about compliance; it's about empowerment. When you have a crystal-clear view of your finances, you can price your services confidently, manage your cash flow, and plan for future growth without the guesswork.

Growing Your Business Beyond the Numbers

Once your finances are in order, you can start thinking bigger. How can you effectively reach more clients in your local area? Understanding a bit about local marketing can make a huge difference in attracting new business.

Having an expert in your corner can turn tax time from a chore into a strategic advantage. If you have questions or just need a bit of guidance, don't ever hesitate to reach out to a professional who truly gets the unique challenges and opportunities in the beauty industry.

• Need assistance? We offer free online consultations:

• – LINE: barontax

• – WhatsApp: 0490 925 969

• – Email: info@baronaccounting.com

• – Or use the live chat on our website at www.baronaccounting.com

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