Private ruling: Work related deductions
Date of advice: 15 January 2026
Published: 9 March 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to claim a deduction or depreciation for the equipment you have purchased to use in your job? | A1: No.

Relevant facts and circumstances: You work as a Professional for Employer Z. You are provided with a vehicle by Employer Z. You have worked for Employer Z for a number of months. Your position description provides your duties and responsibilities You have purchased equipment out of your own pocket to use in the performance of your duties during the relevant income year.

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 expenses to the extent they are incurred in gaining or producing assessable income or are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. A deduction will not be allowed under section 8-1 of the ITAA 1997 for expenses which are of a capital, private or domestic nature, where they lack sufficient nexus to income production, or if they are incurred in gaining or producing exempt income or where a provision of the tax law prevents it. The High Court majority in Commissioner of Taxation v Payne [2001] HCA 3 said it is well established that these words are to be understood as meaning incurred 'in the course of' gaining or producing assessable income, and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income ( Commissioner of Taxation v Day [2008] HCA 53). The majority further stated that the meaning of 'in the course of' gaining or producing income was amplified in Ronpibon Tin NL v Commissioner of Taxation (Cth) [1949] HCA 15 where it was held that: ... to come within the initial part of [section 8-1] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income, or if none be produced, would be expected to produce assessable income... Taxation Ruling TR 2020/1 Income Tax: employees: deductions for work expenses under section 8-1 of the Income Tax Assessment Act 1997 notes in part: 16. For expenses incurred by employees, the fundamental question is whether an expense is incurred while earning employment income. This involves considering the proper scope of the particular taxpayer's work activities to determine if the circumstances of the expense have a sufficiently close connection to earning the employment income. 19. More difficult are cases where an expense ordinarily bears the characteristics of an everyday personal expense. Although generally not deductible, a deduction may be allowed if the employment context creates a close connection between the expenditure and the production of assessable income through work activities; that is to say, 'the occasion of the expenditure is to be found in the income-earning activity itself'. 22. The requirement that expenses be incurred in the course of producing assessable income means that it is not enough to show only that there is some general link or causal connection between expenditure and the production of income. The expenditure must have a sufficiently close connection to performance of the employment duties and activities through which the employee earns income. Even if the positive test of section 8-1 is satisfied, employees cannot claim deductions for outgoings that are private in nature. The term 'private' is not defined in the Act but has its ordinary meanings of 'personal'. The equipment you have purchased is not an allowable deduction or an allowable depreciation as they do not meet the requirement of an allowable deduction under Section 8-1 of the ITAA 1997. While the equipment may be useful in your work as a Professional, the equipment is not necessarily incurred in the carrying out of your duties, this is to say that you are able to perform the duties you are employed to do by Employer Z without these items. Employer Z provides you access to a vehicle to carry out your duties and you have access to other equipment. While the equipment may be useful in your work, you are not required to purchase these items to be employed or maintain your employment with Employer Z. It is for the above reasons the Commissioner cannot allow you to claim a deduction or depreciation on the equipment you have purchased under Section 8-1 of the ITAA 1997.