Private ruling: Work related expenses
Published: September 2011
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for electricity used to charge your work related equipment, using the fixed rate method? | A1: No. | Q2: Are you entitled to a deduction for electricity used to charge your work related equipment, using the actual expenses method? | A2: Yes.

Relevant facts and circumstances: You use electrical equipment in performing your daily employment duties. You need to charge this equipment at home to be able to use it again the next day. You are not able to leave the equipment at work as your work site changes daily. Additionally the equipment is expensive and cannot be left securely on site.

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 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. The costs associated with your home are normally of a private or domestic nature. Taxation Ruling TR 93/30 allows an exception to this rule where part of the home is used in connection with the taxpayer's income earning activities. In this situation, running expenses may be deductible. There are two methods which the Commissioner views as acceptable on the calculation of running expenses of a home office. The first method is to claim the actual expenses incurred. The second method is to use a fixed rate of 34 cents per hour of employment use to cover the costs of heating, cooling, lighting and the decline in value of furniture in your home office. In your case, you are required to recharge your equipment at home overnight, so that the equipment can be used again the next day. As such it is accepted that your home is used in connection with your income earning activity. As the fixed rate method does not cover the expenditure you incur, you are only entitled to calculate the deduction using the actual expenses method. An appropriate formula for calculating the running expenses of an appliance is: (a) x (b) x (c) Where: (a) is the cost per unit of power used, (b) is the average units used per hour (you may need to contact the manufacturer of the appliance to find this out); and (c) is the total annual hours used for income producing purposes. Therefore, you are entitled to a deduction for the electricity costs incurred in recharging your work related equipment at home, using the actual expenses method.

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