Private ruling: Income and deductions for business
Date of advice: 26 October 2017
Published: March 2018
Ruling period: 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to a 100% deduction for the expenses you incur for the property that is used in your business under section 8 - 1 of the Income Tax Assessment Act 1997 (ITAA1997)? | A1: Yes. Section 8-1 of the ITAA 1997 allows a deduction for any loss or outgoing to the extent that it is necessarily incurred in carry on of a business for the purposes of gaining or producing your assessable income . In this case you incur expenses in relation to the property you jointly own with your spouse, these expenses are necessarily incurred to produce your assessable income therefore you are entitled to a full deduction. Further information on deductions can be found on our website ato.gov.au and entering Quick Code QC33872 into the search bar at the top right of the page.

Relevant facts and circumstances: You are a sole trader and operate your own business. You and your spouse, as joint tenants, purchased a building together to operate your business from. You each contributed to the deposit toward this building which was from your joint savings. To acquire this asset you obtained a small business loan in your legal name trading as the business name. Your spouse is also a guarantor for this business loan. Your spouse does not have any involvement with the business or the repayment of this business loan. Your spouse has full-time employment on their own accord. The business has its own bank account and is separate to your joint account with your spouse. You are solely responsible for the: ● daily running of this business ● business decisions ● hiring and termination of staff ● monthly loan repayments ● payment of land and tax rates ● body corporate fees and ● reporting the business’s taxation and superannuation obligations.

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


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