Private ruling: Water, electricity and depreciation on a washing machine
Published: July 2012
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you able to use the rate of 34 cents per hour for electricity, water and depreciation of a washing machine used in your business? | A1: No.

Relevant facts and circumstances: You operate a business. You use water, electricity and a washing machine in your business.

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

Reasons for decision: Summary: Whilst you are entitled to claim a deduction for the costs associated with using your washing machine in your business, you are unable to calculate your deduction using the rate of 34 cents per hour. Instead, you must calculate your deduction based on the actual running costs of the washing machine. | Detailed Reasoning - Detailed reasoning: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and outgoings to the extent to which they are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income. No deduction is allowable where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income or a provision of the taxation legislation excludes it. As part of your business you use a washing machine. The expenses associated with operating the washing machine, including depreciation, are allowable deductions. | Detailed Reasoning - Calculation of deduction: You have asked if you can use the rate of 34 cents per hour in calculating your water, electricity and depreciation (decline in value) on your washing machine. Practice Statement Law Administration PS LA 2001/6 states the Commissioner will accept that a taxpayer has incurred 34 cents per hour for home office running expenses for heating, cooling, lighting and decline in value of furniture (desks, tables, chairs, cabinets and shelves). The costs of associated with operating a washing machine do not fall within the term 'home office running expenses'. Thus, you are unable to use the rate of 34 cents per hour to determine your deductions. You will need to calculate your deduction based on the actual costs of using your washing machine for your business.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.