This page explains how our personal training and coaching services are structured for tax purposes, including GST treatment, deductibility as a business expense, and the key points accountants need to know when advising clients.

Introduction

Our services sit within the existing Inland Revenue and Exercise New Zealand framework for stress-management exercise programmes and are our methods are further recognized through our ongoing membership and association with the Centre for Stress Management and the International Stress Management Association.

Exercise New Zealand (formerly Fitness New Zealand) sought an indicative view from Inland Revenue on whether a structured workplace stress-management exercise programme could be excluded from Fringe Benefit Tax (FBT) under section CX 24 of the Income Tax Act 2007. Inland Revenue confirmed that, subject to certain conditions, qualifying exercise programmes can be treated as part of an employer’s workplace hazard-management obligations rather than as a taxable recreational fringe benefit.

Inland Revenue’s response is expressed in standard employer/employee language. In summary, the conditions are that:

• The programme is administered and facilitated by an individual registered with the New Zealand Register of Exercise Professionals (REPs).

• An assessment of the employee is carried out.

• A personalized programme is prepared for the employee.

• The employee’s progress is monitored.

• The employer is kept up to date on that progress.

To operationalise this, ExerciseNZ created the ExerciseNZ Stress Management Endorsement Programme (previously SMEAP). Providers listed under this programme are independently verified as meeting the Inland Revenue criteria for FBT-exempt stress-management exercise services.

Application to self-employed clients and owner-managed businesses

For self-employed individuals and many owner-managed businesses, the “employer” and “employee” are recognized to be the same person. In those cases, the requirement that “the employer is kept up to date on that progress” does not imply a separate reporting chain. The intent of that condition is met when the business owner, in their dual role, receives and actively uses structured progress information – regular check-ins, recorded training and stress-management metrics, and periodic reviews – to manage their own work-related stress and capacity.

FBT is only relevant where there is an employer–employee relationship (for example, a company providing benefits to staff). For sole traders and other self-employed structures where there is no separate employment relationship, FBT does not generally apply; instead, the expenditure sits with the business and is tested under the normal deductibility rules. In practice, that means that where the programme is clearly linked to managing work-related stress and sustaining earning capacity, self-employed clients will be able to treat the cost as a deductible business expense.

For closely held companies and director-shareholders, the FBT analysis follows the Inland Revenue/ExerciseNZ framework above. Where the arrangement meets the endorsed stress-management criteria (assessment, personalized programme, monitoring and appropriate reporting), there is an existing basis for treating the benefit as part of workplace hazard management rather than a standard recreational fringe benefit.

Our role within this framework

All of our team are endorsed providers under the ExerciseNZ Stress Management Programme and are recognized by both Exercise New Zealand and REPs.

Our online coaching and training services for eligible business clients are designed around this structure. Clients complete an intake and screening process (assessment), receive an individualized programme linked to work-related stress and workload (personalized prescription), and have their progress reviewed and adjusted over time (monitoring). Where the service is purchased by an employer, we can provide appropriate summary reporting back to the business. For self-employed clients, this reporting loop is directed back to the owner in their capacity as the person responsible for managing their own workplace stress and performance.

For accountants, the practical implications are:

• Where a client engages us under an arrangement that meets the ExerciseNZ Stress Management criteria and Inland Revenue’s conditions, there is a basis for treating the cost as part of an employer’s workplace hazard-management obligations rather than as a standard recreational fringe benefit; and

• For many self-employed clients, the same structure and documentation provide support for claiming the cost as a deductible business expense, with FBT generally not engaged because there is no separate employer–employee relationship.

A link to the Inland Revenue confirmation letter is provided here.

Feel free to contact us for more information, or if you would like to be connected with a representative from IRD or ExerciseNZ.