Private ruling: Home office expenses
Date of advice: 3 December 2015
Published: February 2016
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Can you claim a portion of your occupancy expenses as a work-related deduction in regards to your home office? | A1: Yes.

Relevant facts and circumstances: Your employer requires you to work on projects located around the world; in collaboration with teams spread over the world. Your employer does not require your attendance at a particular workplace and do not provide you with a workplace in any of their offices. Your employer does not provide business facilities or specialist equipment required to complete your work. Given the mainly location insensitive nature of the work you perform, and the lack of provision of a suitable workspace, facilities or equipment to perform your duties; your home office serves as your principal place of business. Your home office is used solely for work purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. Generally, expenses associated with a taxpayer's home are private and domestic in nature and are not deductible. However, when an area of the home is considered to be a place of business, the occupancy expenses relating to this area will be deductible. Occupancy expenses include expenses such as rent, mortgage interest, municipal and water rates and house insurance premiums. Taxation Ruling TR 93/30 sets out when an area of the home has the character of a place of business. Paragraph 12 of the ruling provides three cases where the taxpayer has been able to claim the occupancy costs for their home office. Paragraph 12 states: In each of these cases the taxpayer was able to show that, as a matter of fact, there was no alternative place of business, it was necessary to work from home, and that the room in question was used exclusively or almost exclusively for income producing purposes. One of the cases referred to in paragraph 12 involved a country sales manager for an oil company whose employer did not provide him with a place to work ( Case T48, 86 ATC 389; Case 47 , 29 CTBR(NS) 355). In this case, the taxpayer spent on average three days a week working from his home office and two days travelling throughout his sales territory. He used his home office to store work related records and equipment, compile reports for his head office, attend to correspondence and make and receive business calls. His employer did not provide a location for him to work from and he needed an office to complete his work duties. He used an area of his home exclusively as a home office and only for income producing purposes. It was decided that the home office was not used as a matter of convenience but as the sole base of the taxpayer's income producing activities. The taxpayer needed an office to work from and his employer did not provide one. The taxpayer was required by his employment to use part of his home purely for work purposes, therefore the area was characterised as a place of business. The occupancy costs relating to the place of business were considered deductible. In your case, your situation is similar to the case outline above. Your employer does not require your attendance at a particular workplace and does not provide a workspace for you in any of their offices. Your home office is used solely for work purposes. Consequently, your home office is considered to have the character of a place of business and therefore you are entitled to a deduction for a portion of your occupancy expenses under section 8-1 of the ITAA 1997.