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Edited version of private advice
Authorisation Number: 1052200260782
Date of advice: 8 December 2023
Ruling
Subject: Deduction for occupancy expenses
Question
Are you entitled to claim a deduction for occupancy expenses under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
The study area in your house constitutes a 'place of business' in that there is no alternative place of business, it is necessary for you to work from home, and the room in question is used exclusively for income producing purposes.
The actual amount which can be claimed for occupancy expenses varies depending on a taxpayer's individual circumstances. In most cases, the apportionment of the total expense incurred on a floor area basis is the most appropriate method.
However, where an area of the home is a place of business for part of the year only, it may be necessary for expenses to be apportioned on a floor area and a time basis. The time apportionment under this method should reflect the period of the year in which the room is used for income producing purposes.
This private ruling applies for the following period:
Income year ended XX MONTH 20XX
The scheme commenced on:
XX MONTH 20XX
Relevant facts and circumstances
You are employed as a bookkeeper by the Employer.
The Employer does not provide office space to employees, thereby requiring staff to set up and fund their own private and dedicated workspace.
You work part time for the Employer from your home office. The room has the following:
• desk
• office chair
• computer
• printer/scanner
• second computer screen
• stationery supplies
• shelves for business related reference materials and client files.
When choosing a home to rent, you signed a lease for a house that had an additional room surplus to your family's needs so that you could use this room as your office.
The office is not readily suitable or adaptable for being used for private or domestic purposes in association with the home generally because it is closed off and locked from the rest of the house. This is to prevent family members using your office equipment and protect any client confidential information you hold for the Employer's clients.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1