1011587254249 | Legal database

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Edited version of private ruling

Authorisation Number: 1011587254249

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Ruling

Subject: Work related expenses

Are you entitled to a deduction for a portion of your home rent expenses?

No.

This ruling applies for the following period:

Year ended 30 June 2010

The scheme commenced on:

1 July 2009

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are an employee.

Your employer has requested that you store a number of items at your property.

The items are stored on your verandah and in your backyard.

You are not paid anything to look after the items kept at your property.

Relevant legislative provisions

Section 8-1 of the Income Tax Assessment Act 1997

Reasons for decision

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our 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.

For a deduction to be allowable for home office expenses, the expenses must satisfy the requirements of section 8-1 of the ITAA 1997.

Normally, expenses associated with a taxpayer's home are private or domestic in nature, and therefore do not qualify as an allowable deduction. However where the home is used for income producing activities and has the character of a 'place of business', a deduction may be allowable for a portion of 'occupancy expenses' such as rent and 'running expenses' such as electricity charges for heating and lighting (Taxation Ruling TR 93/30).

If the home office is used in connection with the taxpayer's income producing activities, but does not constitute a place of business, only a proportion of the running expenses are allowable.

Taxation Ruling TR 93/30 sets out the criteria to be considered in determining whether a home office is a 'place of business'. Paragraph 4 of TR 93/30 states that:

Whether an area of the home has the character of a place of business is a question of fact. An area is likely to be a place of business where a part of the residence is set aside exclusively for the carrying on of a business by a self employed person such as a doctors surgery. Another example is where part of the home is used as a taxpayer's sole base of operations for income producing activities, that is, where no other work location is provided to an employee by an employer.

In your case, you are not self employed and your home is not your sole base of operations.

It is acknowledged that part of your verandah and backyard are used for storing items and that your employer may have requested that the items are stored and looked after at your property. However, these factors do not mean that your verandah or backyard is a place of business. The majority of your work is carried out at your place of employment.

It is considered that your verandah and backyard are not a place of business.

Therefore, a portion of your rent expenses are not an allowable deduction under section 8-1 of the ITAA 1997.

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