Private ruling: Work related expenses
Date of advice: 23 May 2019
Published: July 2019
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Can you claim a partial deduction relating to occupancy and running expenses? | A1: Yes | Q2: Can you claim a full deduction relating to business kilometres? | A2: Yes | Q3: Can you claim a deduction for internet and mobile usage? | A3: No

Relevant facts and circumstances: You commenced full-time employment in information technology in 20XX. You work from home. You were provided with one laptop and mobile phone for work use. You own your home jointly with your spouse. You designated one entire room as a home office. You incurred occupancy and running expenses for the year ended 30 June 2017. You used the floor metre calculation method. As part of your employment you attended two training courses in the year ended 30 June 2017, over a total of seven days. You incurred business kilometres and you used the cents per kilometre method to calculate your car expenses. In addition to the mobile phone provided by your employer, you also purchased additional phones in the year ended 30 June 2017. These additional phones provided free wireless features that you used to supplement your mobile wireless requirements for work purposes. You used the percentage method to calculate your usage amount and additional usage amount for both the internet and mobile costs. You did not keep a diary for your usage or the additional usage and you did not provide copies of these itemised bills. You incurred costs for these additional mobile phones and the internet usage. You also incurred other additional costs for work related expenses. Your employer did not provide you with any other additional work related equipment.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 28-12

Reasons for decision: Detailed Reasoning - Detailed reasoning: Generally, expenses directly related to the taxpayer's personal circumstances such as personal mobile/internet are characterised as being private or domestic in nature and is not deductible under section 8-1 of the ITAA 1997. Taxation Ruling TR 93/30 Income tax: deductions for home office expenses says that expenses associated with a taxpayers home are of a private or domestic nature and do not qualify as deductions for tax purposes. An exception to this rule is where part of the home is used for income producing activities and has the character of a “place of business”. Another exception to this rule is where part of the home is used in connection with the taxpayer’s income earning activities but does not constitute a place of business. The deductible expenses in respect of a home office can be divided into two broad categories; i) expenses relating to occupancy expenses and ii) expenses relating to running expenses. In your case, we accept that you have a clearly identifiable area that you have designated exclusively for your working from home office. Therefore, a deduction will be partially allowed for the work related expenses you have incurred proportional to your ownership interest. | Detailed Reasoning - Business kilometres: You provided us with copies of the training you completed in connection with your current income earning activities. You used the kilometre method and substantiated your claims by providing documents. Accordingly your car expenses are deductible. | Detailed Reasoning - Internet and mobile: If you’re an employee who regularly works from home, you may be able to claim a deduction for those expenses relating to work. These generally include running expenses, and phone and internet expenses. If you use your own personal phones or internet for work you may be able to claim a deduction for these expenses if you have records to support your claims. If you use your personal phones or internet for both work and private use you will need to work out the percentage in a reasonable portion. When the deduction is more than $50 you can substantiate your claims by keeping records that represent a four-week period for the income year it relates to. These records include diaries, electronic records or itemised bills. If your employer provides you with a phone for work use and is billed for this usage you are not able to claim a deduction. Similarly if you pay for your usage and subsequently reimbursed by your employer, you are not able to claim a deduction. In your case, you were provided with a work mobile phone and a computer laptop. In the year ended 30 June 2017 you purchased additional mobile phones. You used all these additional phones for the free wireless features to supplement the wireless requirements for work purposes. These mobile phones were not provided to you by your employer. You provided us with the percentage used for you and the additional usage. We asked you to substantiate your claims by providing further evidence. As you do not keep a diary, we asked for copies of the bills. This was not provided. We cannot establish the connection to your current income earning activities. You said you use these mobile phones to access the data and free wireless to supplement your mobile wireless requirements for work. This is not a sufficient basis in itself to be deductible. An expense deductible under section 8-1 of the ITAA 1997 for income-earning purposes that has an essential character merely incidental to private purposes and an apportionment has been applied; neither the deduction nor the apportionment is allowable. | Detailed Reasoning - Web development and gadgets: Your employer offers many services and products. We asked you to substantiate your claims by providing additional evidence and you provided this. However, we cannot establish the connection to your current income earning activities. The fact that they aid you is not a sufficient basis in itself to be deductible. We consider this to be personal in nature and an expense deductible under section 8-1 of the ITAA 1997 for income-earning purposes, which has essential character merely incidental to private purposes; is not an allowable deduction.