Edited version of your private ruling

Authorisation Number: 1051733384825

Date of advice: 5 August 2020

Ruling

Subject: Work related expenses

Question 1

Are you able to deduct the purchase of an office chair, desk and computer monitor you purchased in accordance with section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

No.

Question 2

Are you able to make use the 80 cents per hour shortcut method for home office expenses in accordance with section 8-1 of the ITAA 1997?

Answer 2

No.

Question 3

Is your home to work travel a deductible expense in accordance with section 8-1 of the ITAA 1997?

Answer 3

No.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are employed.

Your employer advised that a large portion of their workforce would be required to work from home in response to the COVID-19 pandemic and Government restrictions.

Your employer requested all employees who were able to work from home fill out required paperwork.

You completed this paperwork and returned it to your employer.

In preparation to work from home you purchased the following items:

·         chair

·         desk

·         computer monitor.

You were advised by your employer that you were required to work in the office.

Some of your team members were required and did work from home.

You did not work from home during the 20XX-XX income year.

You travel daily to and home from work in your motor vehicle.

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.

Home office expenses

Taxation Ruling TR 93/30 Income tax: deductions for home office expenses provides advice on allowable deductions under section 8-1 of the ITAA 1997 for taxpayers who have a home office.

In appropriate circumstances, taxpayers are entitled to a deduction for the expenditure actually incurred through their income producing activities which is additional to their private expenditure.

To claim a deduction for working from home, all the following must apply:

·         you must have spent the money yourself and weren't reimbursed and

·         it must directly relate to earning your income, and

·         you must have a record to prove it.

In your case, you incurred expenses purchasing home office equipment after your employer advised you may be working from home. Your employer did not reimburse you for these expenses.

However, these expenses do not directly relate to your income earning activities as you did not actually commence working from home and you did not work from home at any time during the 20XX-XX income year.

The principals within TR 93/30 still apply even in the current COVID-19 pandemic situation. Therefore, you cannot claim a deduction for the home office equipment you purchased.

Shortcut method

In response to the COVID-19 pandemic and changes to taxpayers working arrangements, the ATO announced a temporary shortcut method for taxpayers working from home during the pandemic.

Taxpayers can claim a deduction of 80 cents for each hour they worked from home in the 2019-20 income year during the period 1 March to 30 June 2020 as long as they:

·         were working from home to fulfil their employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls

·         incurred additional running expenses as a result of working from home.

In your situation, you did not work from home during the 20XX-XX income year, nor did you incur additional household expenses as a result.

Therefore, you are not entitled to use the shortcut method and claim a deduction of 80 cents per hour for the hours you worked during the COVID-19 pandemic.

Home to work travel

Draft Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses? provides detailed advice on when an employee can deduct travel expenses under section 8-1 of the ITAA 1997.

Paragraph 35 and 36 of TR 2017/D6 addresses the Commissioner's view on home to work travel.

35. Ordinary home to work travelinvolves ordinary travel between home and a regular work location. The cost of such travel is not deductible.

36. This travel is required for an employee to commence work or to depart after work is completed. These travel expenses are not incurred in gaining or producing the employee's assessable income. They are of a private or domestic nature, reflecting the employee's private choice about where to live.

TR 2017/D6also provides advice onco-existing work locations. Co-existing work locations travel involves travel which can be attributed to the employee having to work in more than one location. This is the case where:

·         the travel is directly between work locations, or between home and an alternative work location, and

·         it is reasonable to conclude that the travel is undertaken in performing the employee's work activities because of the requirement to work in more than one location.

Taking TR 2017/D6 into account and the fact that your car expenses were incurred to travel to and from work, they are considered private in nature and not deductible.

Also, the Commissioner does not consider that you do not have a co-existing work location as you only worked from the one location.

Even though a taxpayer's colleagues may be entitled to claim the certain expenses, it does not entitle another taxpayer, to claim similar deductions.

Whilst we acknowledge the current difficulties associated with the current COVID-19 pandemic and the subsequent hardships many taxpayers are enduring, this does not change the fact that in your circumstances you did not work from home or an alternative workplace to perform your employment duties.

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