Private ruling: Income tax - deductions
Published: August 2014
Ruling period: 1 July 2010 - 30 June 2014
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to claim a deduction for council rates on your home while you are living away from it? | A1: No

Relevant facts and circumstances: • You are a citizen of Australia. • You are an employee working away from home. • You are employed on a fly-in fly-out basis. • You maintain your home and paid council rates. • You are paying expenses in renting another property.

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

Reasons for decision: Summary: You can deduct an expense, such as council rates, from your assessable income under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) to the extent that it is incurred in gaining or producing assessable income except that the expense is of a capital, private or domestic nature. That is, the council rates are deductible to the extent that the property to which they relate is income producing. The property for which you want to claim deductions is not an income producing property. Hence, expenses incurred in owning the property are not deductible from your assessable income. The fact that you are living away from that property and paying expenses in renting another property, does not change the deductibility of the expenses. Note: the expenses of any property you are residing in or own which is not income producing, are not deductible. The basic criterion for deductibility is that the property is income producing, whether or not you are an Australian citizen. Therefore, the council rates paid on your home are not deductible against your assessable income.