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Edited version of your written advice
Authorisation Number: 1012893686736
Date of advice: 12 October 2015
Ruling
Subject: Deductibility of rent
Question
Are you entitled to a deduction for the cost of renting office and storage space?
Answer
Yes.
This ruling applies for the following period
Year ended 30 June 2015
The scheme commences on
1 July 2014
Relevant facts and circumstances
You perform marketing and sales duties for your employer.
Your employer does not have an office in your state.
You rent an office from which to perform your duties and a storage unit in which to store product samples.
Your employer does not reimburse you or pay for the rent for these areas.
Neither the office nor the storage unit is used for private purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
Section 8-1 of the Income Tax Assessment Act 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 or a provision of the taxation legislation excludes it.
Taxation Ruling TR 93/30 discusses the circumstances in which home office expenses are allowable deductions. Where the home office is considered to be a place of business, a taxpayer is able to claim a deduction for expenses associated with the home office, for example rent, electricity charges and cleaning costs.
Paragraph 13 of TR 93/30 states a place of business will only exist if:
• it is a requirement inherent in the nature of the taxpayer's activities that the taxpayer needs a place of business
• the taxpayer's circumstances are such that there is no alternative place of business and it was necessary to work from home, and
• the area of the home is used exclusively or almost exclusively for income producing circumstances.
Although TR 93/30 specifically discusses the use of the taxpayer's home, the principles identified can be applied to your situation. You perform sales and marketing activities from a rented office as your employer does not have an office in your state. There is no private use of the office.
As you have no alternative workplace, it is considered that the office rented is your place of business and as such you are entitled to claim a deduction for the cost of renting the office.
You also rent a storage unit in which to store your employer's product samples. There is no private use of the office. This expense is considered to relate to earning your assessable income and is deductible.