Private ruling: Work related deductions - depreciation
Date of advice: 4 November 2025
Published: 22 December 2025
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for the depreciation on your xx home used as a home office. | A1: Yes. Based on the information provided to the Commissioner the xx home is a capital asset, and as the purchase cost is capital in nature no deduction is allowed under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). However, as outlined below a depreciation deduction is allowed under Division 40 of the ITAA 1997 for the income producing use of the xx home. Section 40-25 of the ITAA 1997 allows a deduction for the decline in value of a depreciating asset you hold, to the extent the asset is used for a taxable purpose. Taxable purpose is defined in paragraph 40-25(7)(a) to mean for the purpose of producing assessable income. Where an asset is held for a non-taxable purpose, no deduction is allowed under Division 40. A xx home is regarded as a depreciating asset for Division 40 of the ITAA 1997. You use the xx home exclusively as a home office. You can claim a deduction for the decline in value under section 40-25 of the ITAA 1997 for the xx home.

Relevant facts and circumstances: You are employed by Employer Z. You are employed in a specific role. Your work covers Australia and international countries. You are required to work from home most of the time and you attend the office a number of days a month. You purchased a xx home. The xx home is a xx structure on xx that is to serve as your home office as you are expected to be working from home a significant amount of time. It is fitted with an office desk, multiple monitors, office chair, router, printer along with a bathroom so that you can work several hours a day when you need to work from home. It is mainly fitted as your office. It has a couch for you to take a break or work in a more relaxed environment. The xx home is fitted with a bathroom, a sink, and a small fridge. It has some closet space for you to store your suits and work attire as you do engage in client/work video conference calls regularly. The xx home is utilised exclusively as a home office, and it has been and will be used as such. The xx home is not intended to be used as a home for you nor your family. The xx home is located at your home address. The xx home is a separate structure and is not connected to your home.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 40-25