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Ruling
Subject: Air conditioning and curtain expenses
Question 1
Are you entitled to a deduction for your air-conditioning usage?
Answer
No.
Question 2
Are you entitled to a deduction for the purchase of darkened curtains for your bedroom?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2012
The scheme commences on:
1 July 2011
Relevant facts and circumstances
You are a full time shift worker.
You work 24/7 shifts on a rotating roster.
Your employee booklet states you should aim to get seven to eight hours sleep in a temperature controlled room with the required level of darkness.
You use your air-conditioner to keep the room at the required temperature for the hours you are asleep.
You have purchased specially darkened curtains to keep the sunlight out when you have to sleep during daylight hours.
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 losses and outgoings which are incurred in the course of gaining or producing assessable income. However, no deduction is allowed where the losses or outgoings are capital, or are of a capital, private or domestic nature or another provision prevents the taxpayer from deducting it.
The courts have considered the meaning of incurred in gaining or producing assessable income. In Ronpibon Tin NL Tong Kah Compound NL v. Federal Commissioner of Taxation (1949) 78 CLR 47; 56 ALR 785; 8 ATD 431, the High Court stated that:
For expenditure to form an allowable deduction as an outgoing incurred in gaining or producing assessable income, it must be incidental and relevant to that end. The words incurred in gaining or producing assessable income mean in the course of gaining or producing such income.
It is acknowledged that due to the nature of your work you are required to work 24/7 shifts on a rotational roster and that as a result you may have to sleep during the heat of the day; however, the use of an air conditioning unit and darkened curtains have no direct connection to the gaining or producing of your assessable income. The purpose of the expenses is to help you sleep. There is insufficient connection to the gaining or production of assessable income for a deduction to be allowed as the expenditure is too remote. Also, the expenses are considered to be private in nature.
Therefore you cannot claim a deduction for the usage of your air conditioner or for your darkened curtains under section 8-1 of the ITAA 1997.