ATO ID 2002/84: Boat as an office
Date of decision: 26 November 2001
Year of income: Year ended 30 June 1996 Year ended 30 June 1997 Year ended 30 June 1998 Year ended 30 June 1999 Year ended 30 June 2000
Business line: Private Groups and High Wealth Individuals

Issue
Is a taxpayer able to claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses relating to a boat used as an office.

Decision
No. The taxpayer is not able to claim a deduction under section 8-1 of the ITAA 1997 for expenses relating to a boat used as an office.

Facts
The taxpayer purchased a boat and uses it as an office and took it to some work sites. The taxpayer is claiming expenses relating to the acquisition and maintenance of the boat.

Reasons for decision
Summary: Section 26-50 of the ITAA 1997 states that any loss or outgoing in relation to the acquisition, retention, ownership of, rights, or maintenance of a boat is not an allowable deduction. However, subsection 26-50(3) of the ITAA 1997 does not stop you deducting a loss or outgoing for a leisure facility if at all times in the income year: None of the above criteria apply to the taxpayer's situation. The use of the boat was at times convenient but it was not essential for the efficient conduct of the business. In Sinclair v. FC of T 2001 ATC 2092; (2000) 47 ATR 1001 it was considered that a business could have been carried out with equal efficiency based in another location rather than on a boat. Therefore the expenses relating to the boat are not deductible because of the operation of section 26-50 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 8-1 section 26-50 subsection 26-50(3)
Case references: Sinclair v. FC of T 2001 ATC 2092 47 ATR 1001
Subject references: Deductions & expenses Leisure & recreational facility expenses Ships & boats