Private ruling: Deductibility of home office expenses
Date of advice: 24 January 2018
Published: June 2018
Ruling period: Period ended 30 June 2017
Date scheme commenced: 01 July 2016

Ruling: Q1: Are you able to claim a portion of rent as home office expenses under sub-section 8(5) of the Income Tax Assessment Act 1997? | A1: Yes Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which 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 except where the outgoings are of a capital, private or domestic nature. In your case, you do not have a dedicated work space provided by your employer and you have allocated a room for exclusive use as a home office, therefore you may claim apportioned expenses for occupancy and running costs.

Relevant facts and circumstances: You are employed as a consultant. Your employer’s strategy does not provide a fixed place of work, only casual spaces are potentially available subject to availability in their office. Your arrangement with your employer is that you as the employee must provide all of the tools, equipment and resources to operate, other than human capital resources to support your project implementations. Your residence is a rented; the floor space dedicated to your home office is 15% of the total house area. You have a dedicated room, separate from the remainder of the house during the day, with a desk, computer, additional large table for working at and furniture for office-related storage. You conduct the following activities in your home office – research, phone calls to clients, business development, administration, marketing, and sales. You meet with client’s onsite when they are based near your residence. Your paid rent for a period of time.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 and | Income Tax Assessment Act 1997 Division 900