In a recent decision, the AAT rejected in full a taxpayer’s claims for “several classes or categories of deductions.”
For the relevant period of 1 July 2021 to 30 June 2022, the taxpayer was (according to his employer) a ‘technical architect’.
However, the taxpayer also claimed he worked from home 6am to 11pm seven days a week, 365 days of the year (as he was ‘always on call’), and his income tax return for the 2022 financial year claimed a wide range of deductions, totalling approximately $40,000.
The AAT separately considered each category of deductions claimed, and rejected each in turn.
In relation to his home office ‘occupancy expenses’ (e.g., for home insurance, council rates, waste disposal, water rates, and repairs), the AAT noted that the ‘home office’ rooms (comprising floorspace occupying 31% of the dwelling’s total floor area) were not physically separate from the remainder of the dwelling, which the taxpayer shared with four other members of his family.
Home office running expenses (e.g., gas, power and internet) were disallowed on the grounds that the taxpayer had “not properly established an entitlement to such deductions or otherwise appropriately apportioned them between private or work-related activities.” The AAT found his 100% claim for the internet, on the basis that the other members of the household did not use the internet connection, “very difficult to accept”.
In relation to plant and equipment expenses, the evidence was “largely non-existent.”
In relation to consumable expenses, the AAT noted that they appeared to be for goods or services of a private or domestic nature (including medications, toilet paper, milk, tea, sugar and insect spray).
The AAT also rejected the taxpayer’s claim for “payments made to his spouse for tax management, office cleaning and document management/storage”, noting that the services provided were generally of a private or domestic nature, and that the rendering of invoices by the spouse “has a degree of artificiality to it”.
