Edited version of private advice

Authorisation Number: 1052214619660

Date of advice: 24 January 2024

Ruling

Subject: Home office occupancy expenses

Question

Are you entitled to claim a deduction for occupancy expenses in relation to your home office space?

Answer

No.

This ruling applies for the following periods:

Year ended 20XX

Year ended 20XX

Year ending 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You are an employee.

You have a working from home agreement with your employer.

Your employer provides an alternative place to work from.

The working from home agreement is for five days a week, Monday to Friday, standard hours.

The working from home agreement with your employer commenced on July 20XX and the current agreement will be reviewed on June 20XX.

You work from home 99.9% of the time.

Your employer's place of business has an unallocated desk arrangement in place.

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 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.

As an employee working from home, generally you can't claim occupancy expenses (such as mortgage interest, rent, rates and home insurance). The exception to this rule is where you actually run your business from home & your home constitutes a 'place of business' for tax purposes.

To claim occupancy expenses when you work from home, you must show that it was necessary for you to work from home because your employer doesn't provide you with an alternate place to work from as outlined in Taxation Ruling TR 93/30, paragraph 13:

... a place of business will exist only 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 purposes.

It is acknowledged that you and your employer have a working from home arrangement however, this does not convert your home to a 'place of business'. You are not self-employed, and your home is not your sole base of operations.

While you carry out the majority of your work duties at home, your employer provides an alternative place to work from if you choose. The fact that there limited seating constraints at the employer's place of business is irrelevant in this circumstance.

Your home office is not regarded as a place of business for tax purposes and the Commissioner has no discretion under the tax laws to make an exemption.