Edited version of private advice

Authorisation Number: 1051988242950

Date of advice: 23 June 2022

Ruling

Subject: Deductions - work-related expenses

Question 1

Is a deduction allowed for the costs incurred for occupancy expenses in relation to your dedicated office space, used for your employment?

Answer

Yes, the Commissioner accepts that your circumstances meet the characteristics required to claim occupancy expenses under other work-related expenses. Your situation is outside the scope of a normal working from home arrangement. Currently you have no other choice but to work from your residence, as your employer has yet to acquire alternative premises such as an office. You also conduct business on behalf of your employer from your residence.

Apart from apportioning your claim on a floor-area basis, your deduction will need to be reduced to account for use of the office space by your spouse.

Question 2

Is a deduction allowed for the costs incurred for occupancy expenses in relation to your living room, used for your employment?

Answer

No. Taxation Ruling TR 93/30 Income tax: deductions for home office expenses considers when occupancy expenses are deductible for an employee due to the absence of an alternative place for conducting income producing activities. Paragraph 13 lists reasons that all must exist for such a deduction to be allowable, including that the area of the home is used exclusively or almost exclusively for income producing purposes.

It should also be noted that a living room would generally not be unsuited for, or unable to be adapted for, use for private or domestic purposes associated with the home generally. This also weighs against the space being considered a place of business, as per paragraph 5 of TR 93/30.

This ruling applies for the following periods:

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are an employee

You became employed by a new Australian company.

Your position is a Managing director.

As your employer is new, they currently have no office in Australia.

You conduct business on behalf of your employer from your place of residence.

You meet clients at your place of residence in your role as employee.

You have a separate room that is used exclusively for business.

You have significant office equipment within your home office.

You moved into a new residence, as it has additional space, and it better suits your work needs.

At times you may share part of the home office.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1