Private ruling: Personal services income - deductions
Date of advice: 16 September 2020
Published: October 2020
Ruling period: Period end 30 June 2020
Date scheme commenced: 1 July 2019

Ruling: Q1: Will you be allowed a deduction for a portion of your household running expenses relating to you generating personal services income? | A1: Yes. Section 85-15 of the Income Tax Assessment Act (ITAA 1997) does not prevent a deduction for amounts incurred by you for running expenses for using a room in your home for income producing purposes. Running expenses related to your income earning activity as a carer (such as electricity and gas, phone and internet, cleaning, decline in value, and repairs of depreciating assets) can be claimed on an apportionment basis, excluding any private use. | Q2: Will you be allowed a deduction for occupancy expenses and running expenses relating to the premises rented which is used to generate your personal services income? | A2: Yes. In the course of generating your personal services income you incurred rental accommodation expenditure for your client. As the rental accommodation is not your residence, section 85-15 of the ITAA 1997 will not prevent this deduction.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are a carer for a client with disabilities. You earn Personal Services Income. You are required to provide respite care for your client away from their normal home for an average of two days per week. You have previously rented a two-bedroom unit for three months for your clients respite care days. Only you and your client stayed in the rental accommodation. The client had their own bedroom and use of living areas. The accommodation included independent living support. The rental accommodation had signage in the window identifying you as a carer. You have a spare room in your home that you have set up for your client as a bedroom. Your client has use of living areas.

Relevant legislative provisions: Section 8-1 of the Income Tax Assessment Act 1997 | Section 85-10 of the Income Tax Assessment Act 1997 | Section 85-15 of the Income Tax Assessment Act 1997