Edited version of private advice

Authorisation Number: 1052275966422

Date of advice: 16 July 2024

Ruling

Subject: Deductions - home office expenses

Question

Can you claim income tax deductions for home office expenses in accordance with section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Having considered your circumstances, the Commissioner accepts that you are entitled to a deduction for the running expenses of your home office, under section 8-1 of the ITAA 1997. Where you conduct activities with a direct nexus to the generation of your assessable income from your investments, you will need to apportion your running expenses on the basis of the floor area and time in which you use your home office to produce assessable income.

Further information on working from home expenses and how to claim deductions, can be found by accessing www.ato.gov.au and searching:

•         QC 33864 (Deductions for home-based business expenses).

•         QC 72158 (Working from home expenses)

•         QC 72151 (Assets costing more than $300)

This ruling applies for the following period:

Year ended 30 June 20XX

Year ending 30 June 20XX

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

You are an Australian resident for income tax purposes, you are retired.

You use an office located in your principal place of residence (the Property) to manage your investments, and communicate with your financial planner, accountant and bookkeeper.

You maintain the following entities:

•         Trust

•         Company

•         Self-Managed Superannuation Fund (SMSF); and

•         Personal investment portfolios

You earn assessable income from:

•         Distributions from a managed fund in your name

•         Dividends from a company that receives a distribution from a managed fund

•         Distributions from a Family Trust that has an investment

•         Pension from the SMSF that has a managed fund.

You are not an active share trader.

Your home office occupies 20% of the floor space of the Property.

You do not have any rental contracts in place where you state you are running a home-based company or trust; to distinguish any expenses the business incurs versus the expenses you incur.

You want to claim deductions for:

•         Mobile phone expenses

•         Internet expenses

•         Electricity

•         Office furniture

•         Xero subscription

•         Bookkeeper fees.

You average approximately X hours per week, managing your investments.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1