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Edited version of private ruling
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Ruling
Subject: Deduction - storage costs
Question
Are you entitled to a deduction for furniture storage costs?
Answer
No.
Relevant facts and circumstances
You own a property with your spouse as joint tenants.
You and your spouse are considering relocating overseas for a few years at the end of 2010.
You intend on renting out your home and storing your furniture in an offsite storage facility.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1.
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.
A number of significant court decisions have established that, for an expense to satisfy the requirements of section 8-1 of the ITAA 1997:
It must have the essential character of an outgoing incurred in gaining assessable income or, in other words, of an income producing expense (Lunney & Hayley v. Federal Commissioner of Taxation (1958) 100 CLR 478; (1958) 11 ATD 404; (1958) 7 AITR 166)
There must be a nexus between the outgoing and the assessable income so that the outgoing is incidental and relevant to the gaining of assessable income (Ronpibon Tin NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 8 ATD 431; (1949) 4 AITR 236); and
It is necessary to determine the connection between the particular outgoing and the operations or activities by which the taxpayer most directly gains or produces their assessable income (Charles Moore & Co Pty Ltd v. Federal Commissioner of Taxation (1956) 95 CLR 344; (1956) 11 ATD 147; (1956) 6 AITR 379 and Federal Commissioner of Taxation v. Hatchett (1971) 125 CLR 494; 71 ATC 4184; (1971) 2 ATR 5570.
In your case, you are intending to place your furniture in storage so that your property can be rented. The costs will be incurred because of your personal choice to store your furniture rather than selling it. As such the costs are considered to be a private expense.
Accordingly, you are not entitled to a deduction under section 8-1 of the ITAA 1997 for the expenses incurred in removing and storing your furniture.
Whilst we appreciate your personal circumstances, there are no provisions within the legislation that give the Commissioner of Taxation the discretion to allow a deduction for the cost of removal and storage of furniture.
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