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Claiming cost of air conditioner installation

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Newbie

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Hi,

I am an employee who works from home full time. My employer does not provide an office to work in, and as such, I have been working from home for several years and, as far as I understand, am eligible to claim occupancy expenses as a result. Late last year I moved house and had a split system unit installed in my home office. My home office is a completely separate building to the main residence on my property and is solely used for work purposes. I would like some assistance with how I can claim the purchase price and installation of the unit in my tax return.

Cheers

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Community Support

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Hi @xsurfergirlx

 

Thanks for the question.

 

@dirk has provided you with some great information. We also suggest that you have a good look at TR 93/30 as it may be relevant to you.

 

A similar question has been asked in our Community before. You can check out the thread and our response here: Home office

 

You will see from our response as well as the thread's other posts that you have posed a complex question that doesn't have a straight-forward answer. If you can claim the cost of your air conditioner, you can only claim a deduction for its decline in value that is attributable to your work use.

 

We suggest that you check out the information about home office expenses on our website. If you would like us to take a closer look at your situation, you can request an early engagement discussion with us.

 

All the best.

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Devotee

Replies 6

@xsurfergirlx 

 

I think you already know about home occupancy expenses under your circumstances because you are in the unique situation of having an area of your home that has the "characteristics" of a place of business and the ATO public ruling TR93/30 in which they state at paragraph 4:

 

4. Whether an area of the home has the character of a place of business is a question of fact which depends on the particular circumstances of each case. This is likely to be the case where a part of a residence is set aside exclusively for the carrying on of a business by a self employed person (e.g., a doctor's surgery). Another example is where part of the home is used as a taxpayer's sole base of operations for income producing activities (e.g., where no other work location is provided to an employee by an employer). 

 

 

however, as for how to claim a deduction for the air con unit .,  I will leave this to the ATO to answer @NateATO .  and maybe @macfanboy can also provide some assistance

 

 

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Most helpful response

Community Support

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Hi @xsurfergirlx

 

Thanks for the question.

 

@dirk has provided you with some great information. We also suggest that you have a good look at TR 93/30 as it may be relevant to you.

 

A similar question has been asked in our Community before. You can check out the thread and our response here: Home office

 

You will see from our response as well as the thread's other posts that you have posed a complex question that doesn't have a straight-forward answer. If you can claim the cost of your air conditioner, you can only claim a deduction for its decline in value that is attributable to your work use.

 

We suggest that you check out the information about home office expenses on our website. If you would like us to take a closer look at your situation, you can request an early engagement discussion with us.

 

All the best.

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Devotee

Replies 4

@macfanboy 

 

When you have a moment can you please assit this lady with her query about claiming specific deductions ..

 

As you will see the ATO do not provide a clear response in my opinion on how she claims those deductions.

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Taxicorn

Replies 3

@dirk @xsurfergirlx 

 

I would suggest that a deduction could not be claimed as it doesn't really fall under a business premises situation.

Any possible deduction is mentioned in  TR 93/30 - which ha been removed...

 

The Wayback machine does show this and the relevant section implies no:

 

Deduction for the decline in value of depreciating assets:

26. Taxpayers are entitled to claim deductions for the decline in value of depreciating assets which are used or installed ready for use, for a taxable purpose. In the case of depreciating assets used in a home office, taxable purpose means the purpose of producing assessable income. Depreciating assets relevant to a home office may include a professional library and items of equipment used at home.

27. Where items used for business purposes are also utilised for domestic or private purposes, the taxpayer will need to reduce their deductions for the depreciating assets' decline in value in proportion to the extent that the assets are used for other than a taxable purpose.

 

Best to seek a private ruling if you want to go ahead.

https://www.ato.gov.au/General/ato-advice-and-guidance/ato-advice-products-(rulings)/private-rulings...

 

I certainly hope that she was renting the previous home and is renting this home as there will be Capital Gains implications...

 

Sorry for the late response but have been flat out at work helping others with their tax...

 

 

 

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Devotee

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Hy @macfanboy 

 

thanks for input on air conditioner ... Ruling still valid but I see what your getting at for temporary measures COVID

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Newbie

Replies 1

Thank you for your input everyone. I will look at seeking a private ruling for this. Hopefully I can work out how to do it, lol. To clarify, the air conditioner is only used during working hours as it is installed in a building that is only occupied during working hours. Without it, I would not be able to keep my office at a comfortable ambient temperature to work in. As I see it, it is a capital (?) improvement to the existing building which enables me to work in it. It was installed prior to COVID. I do understand the implications of Capital Gains, the new house is not in my name so Capital Gains will not apply. I am renting out my previous house now, so as I understand it, Capital Gains will apply to that property anyway. Cheers

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Taxicorn

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@xsurfergirlx 

 

I would still seek a private ruling on this to cover yourself because according to the ATO support staff you can claim it as discussed here:

 

https://community.ato.gov.au/t5/Personal-tax-questions/Home-office/td-p/29418

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Devotee

Replies 2

@xsurfergirlx 

 

As you can see the ATO staff on here are out of touch with their own ruling and the legislation, and you would be wise to hold your own position... if need be just apply for a private-ruling/ which in all probably will be favourable to yourself.

 

@ChrisATO   is right this question has been asked many times before in the past and that is where I got my answer from, the answers in the past were technically cleared by higher level ATO technical officers and are even "ATO certifiied", and what I have pasted below is not the only example, their are many other posts just like it ..      BTW the person that wrote the below response had from my understandering one of the best taxation technical skills and knowledge, even better than most ATO technical officers, and the ATO usually could not match his level of technical skills, even some of the other better non-ATO contributors on this forum would look to them for answers, including for answer to questions that the ATO simply had difficulty addressing properly..

 

The ATO staff that are on this forum whilst they do try their best seem to be confused about this entire issue and they seem ot think that the ATO views on COVID19 home office occupancy expenses relate to everyone when in fact under certain circumstances like yours home occupancy are clearly an allowable deduction.  This issue is only complex to them because they have little experience in dealing with it.   The fact is the ATO can not go against their own rulings ... 

 

 

 

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You are in a unique situation and you should be able to claim the home office expenditure that relates to that one room in direct proportion to expenditure for the residence where you will be resideing.

 

Have a good read of the following, as it is something that is not widely published and little known.

 

The ATO has a public ruling TR 93/30  which states you may be able to claim occupancy expenses if your home office has  " the character " of a place of business even if you are an employee.   

 

 Taxation ruling TR93/30 para 4 states - 

Whether an area of the home has the character of a place of business is a question of fact which depends on the particular circumstances of each case. This is likely to be the case where a part of a residence is set aside exclusively for the carrying on of a business by a self employed person (e.g., a doctor's surgery). Another example is where part of the home is used as a taxpayer's sole base of operations for income producing activities (e.g., where no other work location is provided to an employee by an employer)

 

The documentation must be in English unless the expense was incurred outside Australia.

https://www.ato.gov.au/Tax-professionals/Your-practice/Tax-and-BAS-agents/Risk-assessment/Work-relat...

 

Exchange rates are covered on the ATO website here: https://www.ato.gov.au/Rates/Foreign-exchange-rates/

 

The better way to approach this issue so you get it all right the first time is to apply to the ATO for a Private Ruling  and you will get the opportunity to discuss with the ATO officer that will provide the response, and all this will make it much easier for you to understand how all of this works for you.

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Champion

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@dirk are you @Annonymous1 ? 

 

Welcome back 

 

How do you know the levels or technical capabilities of the staff that reply on here and whether or not thats changed? I think the staff on here are awesome and have great technical knowledge. They're genuinely trying to help people as well