Private ruling: Home based business

Ruling: Q1: Do fringe benefits arise under the Fringe Benefits Tax Assessment Act 1986 in respect of any benefits that may be received by you or your family members as a result of parts of your residence being used for business purposes? | A1: No | Q2: Can you apply the floor area method in determining the business use percentage of the property for income tax deduction purposes under section 8-1 of the Income Tax Assessment Act 1997 ? | A2: Yes | Q3: Will Part IVA of the Income Tax Assessment Act 1936 apply to deny you a tax benefit that would otherwise be allowed? | A5: Yes | Q4: In any possible future sale of the property that results in a net capital gain, can you disregard the private use percentage by only treating capital gains tax as applying to the business use percentage and then in choosing to apply the small business concessions? | A6: We decline to rule on this matter as the circumstances are not seriously contemplated. General information is provided in the reasons for decision. | Q5: In any possible future sale of the property that results in a net capital gain, will Part IVA of the Income Tax Assessment Act 1936 apply to deny you a tax benefit that would otherwise be allowed by the main residence exemption? | A7: We decline to rule on this matter as the circumstances are not seriously contemplated. | Q6: When calculating the business use area, can you exclude enclosed garages, carports, partially enclosed outdoor areas (eg patios and pergolas) and enclosed sheds from the total floor area of the property if they are not used, even in part, for business purposes? | A8: Yes | Q7: If the areas referred to in Question 7, or part of those areas, are used exclusively for business purposes, can you claim expenses in relation to those areas by including them in the calculation of the business use percentage? | A9: Yes | Q8: Can you include as a business use area any uncovered external areas such as any client and/or business vehicle car parking areas and driveways as well as walkways to any exclusive indoor business use areas? | A10: No | Q9: Where you are, or later become, registered for goods and services tax, will goods and services tax apply to the private use percentage as realised from a future sale of the property? | A11: We decline to rule on this matter as the circumstances are not seriously contemplated. General information is provided in the reasons for decision. | Q10: Without increasing your taxation obligations under any provisions relevant to the scheme, can concurrent operations occur at other locations, such as branches situated in other suburbs, whereby you may possibly divide your working time between the different places of business or have employees conduct the business at those locations? | A12: We decline to rule on this matter as the provision of the law to be applied in answering the question has not been identified. | Q11: Can you claim a capital works deduction under Division 43 of the Income Tax Assessment Act 199 7 on the business use area of the property in accordance with the business use percentage? | A13: Yes | Q12: If in future, you complete a property extension which is exclusively for business use, can a capital works deduction be claimed in relation to the full construction costs of the extension under Division 43 of the Income Tax Assessment Act 1997 ? | A14: We decline to rule on this matter as the circumstances are not seriously contemplated. General information is provided in the reasons for decision. | Q13: Providing at all times that you run a business from the property and the method for calculating the business use percentage is consistently applied, do any other considerations need to be given for the purposes of ascertaining your property based expense deductions because you might move into or out of the property as a place to live? | A15: We decline to rule on this matter as the provision of the law to be applied in answering the question has not been identified. General information is provided in the reasons for decision. | Q14: Providing at all times that you run a business from the property, treat the property as your main residence and the method for calculating the business use percentage is consistently applied, do any other considerations need to be given for the purposes of ascertaining your property based expense deductions because the business and private use areas change their characteristics sufficiently to become that of the other? | A16: We decline to rule on this matter as the provision to be applied in answering the question has not been identified. General information is provided in the reasons for decision.. | Q15: Is there a tax law or any other authority that limits the amount of times and frequency that a private use area and a business use area might change their character and subsequent use to the other and if so, what is the effect on the scheme? | A17: We decline to rule on this matter as the provision to be applied in answering the question has not been identified. General information is provided in the reasons for decision. | Q16: Can you claim a full deduction for the depreciation of the fixtures and fittings within a business use area under Division 40 of the Income Tax Assessment Act 1997 ? | A18: Yes | Q17: Aside from those already raised, which other relevant provisions exist (if any), within the full scope of taxation law, to increase your taxation obligations and liability under the scheme? | A19: We decline to rule on this matter because it is too broad requiring the examination of all provisions of the ITAA 1936 and ITAA 1997.


Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 subsection 136(1), | Income Tax Assessment Act 1997 section 8-1, | Income Tax Assessment Act 1997 section 25-10, | Income Tax Assessment Act 1997 Division 40, | Income Tax Assessment Act 1997 Division 43, | Income Tax Assessment Act 1997 section 43-210, | Income Tax Assessment Act 1997 section 43-215, | Income Tax Assessment Act 1936 Part IVA, | Income Tax Assessment Act 1936 section 177A, | Income Tax Assessment Act 1936 subsection 177A(5), | Income Tax Assessment Act 1936 section 177C and | Income Tax Assessment Act 1936 section 177D.


Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Subject: Home based business: This private ruling concerned the following issues and the Commissioner has ruled on each of the specific questions: | Question 4(a): Can you claim a deduction for any expenditure incurred in improving or maintaining front and rear entrance doors to the extent of the business use percentage? | Question 4(b): Can you claim a deduction for any expenditure incurred in improving or maintaining walls, doors and windows that separate business and personal use areas and other common items such as alarm systems, power meters and sewer lines to the extent of the business use percentage?