ATO Interpretative Decision
ATO ID 2002/84
Income Tax
Boat as an officeFOI status: may be released
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This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Current
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is a taxpayer able to claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses relating to a boat used as an office.
Decision
No. The taxpayer is not able to claim a deduction under section 8-1 of the ITAA 1997 for expenses relating to a boat used as an office.
Facts
The taxpayer purchased a boat and uses it as an office and took it to some work sites. The taxpayer is claiming expenses relating to the acquisition and maintenance of the boat.
Reasons for Decision
Section 26-50 of the ITAA 1997 states that any loss or outgoing in relation to the acquisition, retention, ownership of, rights, or maintenance of a boat is not an allowable deduction.
However, subsection 26-50(3) of the ITAA 1997 does not stop you deducting a loss or outgoing for a leisure facility if at all times in the income year:
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- It is held for sale in the ordinary course of your business.
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- It is used mainly in the ordinary course of your business, for the purpose of providing leisure facilities for payment.
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- It is used mainly to produce your assessable income in the nature of rents, lease premiums, license fees, or similar charges.
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- It is used mainly for your employees to use, or for the care of your employees' children (this does not apply to employees who are members or directors of the company).
None of the above criteria apply to the taxpayer's situation. The use of the boat was at times convenient but it was not essential for the efficient conduct of the business. In Sinclair v. FC of T 2001 ATC 2092; (2000) 47 ATR 1001 it was considered that a business could have been carried out with equal efficiency based in another location rather than on a boat.
Therefore the expenses relating to the boat are not deductible because of the operation of section 26-50 of the ITAA 1997.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 20 November 2015 | Legislative References | Replaced subsection 26-50(5) of the ITAA 1997 with subsection 26-50(3) of the ITAA 1997 |
| Reasons for Decision | Partly rewritten for clarification |
Year of income: Year ended 30 June 1996 Year ended 30 June 1997 Year ended 30 June 1998 Year ended 30 June 1999 Year ended 30 June 2000
Legislative References:
Income Tax Assessment Act 1997
section 8-1
section 26-50
subsection 26-50(3)
Case References:
Sinclair v. FC of T
2001 ATC 2092
47 ATR 1001
Keywords
Deductions & expenses
Leisure & recreational facility expenses
Ships & boats
Date reviewed: 13 February 2018
ISSN: 1445-2782
| Date: | Version: | |
| 26 November 2001 | Original statement | |
| You are here → | 20 November 2015 | Updated statement |