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Edited version of your written advice
Authorisation Number: 1012841473187
Date of advice: 16 July 2015
Ruling
Subject: Office furniture
Question 1
Is a deduction allowable in the year of income for the actual cost of furniture and mobile bookshelves purchased for use in your office?
Answer
No.
Question 2
Is a deduction for depreciation allowable on the cost of furniture and mobile bookshelves purchased for use in your office?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2015.
The scheme commenced on:
1 July 2014
Relevant facts and circumstances
Your employer was unable to provide funds to purchase new furniture for your refurbished office and would only supply old pieces which you indicate were mismatched and inappropriate for the purposes of conducting meetings with staff and visitors.
As a result you purchased appropriate furniture and bookshelves, all to be installed in the office at your own cost.
You are seeking to claim the cost of the items purchased against your assessable income or alternately being allowed to claim depreciation on the items purchased.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 8-1
Income Tax Assessment Act 1997 - Section 40-25.
Reasons for decision
Section 8-1 of the ITAA 1997 permits a deduction for expenditure incurred in deriving a taxpayer's assessable income so long as the expenditure so incurred is not of a capital, private or domestic nature.
Expenditure on furniture and bookshelves to be used in your office are considered to be capital expenditure as those items will normally be used over a number of years and the cost is accordingly not attributable to any one particular year of income.
Therefore no deduction will be allowable in the year of income for the actual cost of the items purchased under section 8-1 of the ITAA 1997.
However, Section 40-25 of the ITAA 1997 permits a deduction for the decline in value of a depreciating asset.
An employee may be entitled to a deduction for the decline in value of assets that the employee holds and uses in relation to his or her employment even if such use is not a condition of the employment. It is enough for the use of the assets to be within the scope of the duties of the particular employment.
In your case, the furniture and bookshelves are necessary for you to perform your duties. Notwithstanding the fact that your employer has declined to meet the cost of these items and you have elected to purchase them from your own funds, a deduction for the decline in value (depreciation) of the items will be allowable against your assessable income.