With LinkedIn becoming an increasingly popular platform for networking and promoting one’s business, many professionals and entrepreneurs are considering upgrading to LinkedIn Premium. A common question that arises is whether the fees for LinkedIn Premium can be claimed as a tax deduction with the Australian Taxation Office (ATO). In this comprehensive guide, we’ll analyze if and how LinkedIn Premium fees can potentially be claimed on your tax return.
What is LinkedIn Premium?
LinkedIn Premium is the paid version of LinkedIn that provides users with additional features beyond the free basic account. Some of the key benefits of LinkedIn Premium include:
- Seeing who viewed your profile
- Advanced profile analytics such as demographic data on your page views
- Unlocking up to 30 advanced LinkedIn search filters
- InMail messages to connect with anyone on LinkedIn, even if you’re not connected
- Selecting up to 25 topics to be featured on your profile as areas of expertise
LinkedIn Premium is available on monthly or annual subscription plans, with prices starting from $54.99 per month for the Premium Career subscription. There are also other upgraded plans like Premium Business and Sales Navigator that provide additional features.
Claiming work-related expenses as tax deductions
The costs of many work-related expenses are deductible when calculating your taxable income for the financial year. For an expense to be claimed as a tax deduction with the ATO, it typically needs to satisfy the following requirements:
- The expense must directly relate to earning your work income
- You must have spent the money yourself and not been reimbursed for it
- You must have a record to prove the expense (usually a receipt)
Some common types of deductible work-related expenses include vehicle expenses, working from home expenses, work uniforms, seminars and conferences, phone and internet costs, and self-education costs.
To be able to claim an expense, it needs to be included in your tax return for the relevant financial year and properly substantiated. The ATO may ask you to provide evidence for any claims made.
Is LinkedIn Premium deductible for my profession?
Whether the fees for LinkedIn Premium are deductible depends chiefly on your occupation and how you use LinkedIn for work purposes. LinkedIn Premium costs are most likely to be deductible if:
- Your job relies on networking and LinkedIn is core to building professional connections
- You need advanced LinkedIn features to market a business, scout talent, connect with clients etc
- Your employer requires you to maintain a LinkedIn profile and/or pay for Premium access
Here are some examples of common professions where LinkedIn Premium fees may be claimed as tax deductions if used specifically for work:
- Sales professionals – Prospecting for new clients and networking
- Recruiters – Searching profiles and contacting potential candidates
- Marketers – Building a professional brand and making industry connections
- Consultants – Promoting consultancy services and profile
- Journalists – Researching stories and connecting with sources
Alternatively, if you only use LinkedIn occasionally or predominantly for personal activity, the subscription fees would be unlikely to be deductible.
What portion of LinkedIn Premium is deductible?
As LinkedIn Premium can potentially be used for both personal and work related purposes, only the portion of fees that covers work usage is deductible. A reasonable estimate needs to be made of the percentage used for work purposes.
For example, if you determined that 60% of your LinkedIn activity related to earning employment income, then you could potentially claim 60% of your LinkedIn Premium fees as a deduction. Keep in mind you may need to justify this percentage if requested by the ATO.
Does my employment status affect eligibility?
Whether you are self-employed, a sole trader, an employee or some other employment status can impact whether LinkedIn Premium fees are deductible:
- Self-employed – More likely to be eligible, as usually vital for promoting business
- Employees – Need to show use relates to current employment duties
- Not working – Less likely eligible if not currently earning income
As an employee, if your employer specifically requires you to upgrade to LinkedIn Premium, the fees are more likely to be fully deductible. Voluntarily upgrading though would require apportioning based on work use.
What records do I need to keep?
To claim a deduction for LinkedIn Premium fees, you need to be able to substantiate the expense if required by the ATO. It’s important to keep the following records for at least 5 years:
- Receipts showing your LinkedIn Premium payment and billing details
- Bank or credit card statements showing the expense amount being paid
- Written record outlining your calculation of the work-related percentage and how you determined this
Having detailed records will ensure your deduction claim can be properly substantiated and reduce the risk of it being denied.
Can I claim the expense under the shortcut method?
The ATO offers a shortcut method that allows eligible work-related expenses of $300 or less to be claimed without needing to keep detailed records. However, this does not apply for LinkedIn Premium fees, as they exceed the $300 limit.
You’ll need to keep proper documentation of your LinkedIn Premium expenses, the work-related percentage calculation and be able to explain how it relates to your income generation.
Examples of claiming LinkedIn Premium on tax
To illustrate how LinkedIn Premium tax claims work in practice, here are some examples for different employment scenarios:
Self-employed marketing consultant
- Pays $600 annually for LinkedIn Premium Business
- Uses LinkedIn predominantly for connecting with clients and promoting services
- Estimates 80% of use is business-related
In this case, the consultant could claim $480 (80% of $600) as a tax deduction for their LinkedIn Premium fees.
Employed recruitment manager
- Pays $65 monthly for LinkedIn Premium Career
- Uses LinkedIn to source candidates and arrange interviews
- Determines about 50% of use relates to current job duties
Here the recruitment manager could potentially claim around $390 (50% of 12 x $65) as a deduction based on the assessed work-related use.
Casual retail employee
- Upgrades to Premium to view profile visitors and build connections
- LinkedIn use is casual and no employment requirement to maintain profile
For a casual retail employee, it would be difficult to justify claiming any deduction for LinkedIn Premium fees given the very limited work-related use.
Common questions
Here are answers to some other frequently asked questions about claiming tax deductions for LinkedIn Premium:
Do I need a separate work LinkedIn profile?
No, you can claim expenses related to your personal LinkedIn profile provided you use it for both professional and personal purposes. However, you can only claim the portion of costs that relate specifically to earning income from the profile.
What if I’ve already claimed the maximum $300 work expenses under the shortcut method?
If you have already utilized the full $300 shortcut deduction limit, you can still claim further expenses like LinkedIn Premium fees by providing a detailed substantiation of the amount and work-related use.
Can I claim if LinkedIn is only used occasionally for work purposes?
Yes, but the amount deductible would be very small as an appropriate apportionment needs to be made based on the extent of work use compared to personal use.
Do I need a business ABN to claim this deduction?
No, there is no requirement to have an ABN to claim deductions for legitimate work-related expenses. Both individual employees and businesses can claim deductions for allowable expenses.
Conclusion
Claiming tax deductions for LinkedIn Premium fees is allowable in certain circumstances depending on your occupation and usage. By keeping detailed records and reasonably apportioning based on your work-related use, you may be able to claim a sizable deduction. However, purely personal use of LinkedIn Premium would not be deductible. Consulting with a tax professional can help clarify if your individual circumstances make LinkedIn Premium fees eligible for deduction.