Tax Implications for Property and Business Expenses

Australian Taxation Law

Legislations:
Property used in running the business –
It is seen if an individual owns, leases or rent a particular property say shop, office or even home
for the purpose of his business, it would be required to –
 Include the rental income for filing the tax return
 Claim income tax deductions for the property expenditures
 Liability for capital gains tax if the property is being sold
It is required to abide by the GST compulsions and prerogatives while buying, selling, leasing or
renting the premise1.
Running business from home –
It might happen that the residential property of the individual strives to become his business
premise as well since he has been running the business from home and there is a room
exclusively set and designed for that particular purpose2. It could be elucidated in the following
manner –
 A small business operator having his main office at home
 A craftsman having workshop at home
 A professional having his chamber at home
Working from home –
If the individual or professional work from home he has the scope to claim a deduction for the
expenditures incurred related to that particular area as used for the purpose3. The deductions
would be applicable based on the following facts –
1 Ato.gov.au, 2019. Home office expenses. [Online]
Available at: https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Home-office-
expenses/
[Accessed 29 April 2019].
2 Ato.gov.au, 2019. Running your business from home. [Online]
Available at: https://www.ato.gov.au/General/property/property-used-in-running-a-business/running-your-business-
from-home/
[Accessed 29 April 2019].
3 Ato.gov.au, 2019. Working from home. [Online]
Available at: https://www.ato.gov.au/general/property/your-home/working-from-home/
[Accessed 29 April 2019].

 If the individual has a spare work area at his home say a study or living area meant for
the purpose. It is a case wherein home is not the principal working place but the
individual works there after his scheduled working hours.
 If home is the principal working area and a specified room is established for the purpose
In case of the 2nd instance, the individual is supposed to have certain deductions regarding the
expenses on using the utilities of the room, work related telephone costs, and depreciation of the
furniture and fittings used for the purpose.
Usage of car –
In case the individual has a car of his own which he uses for his work, the same is entitled to
have a deduction on account of expenditures incurred on the car. The individual might use the
car partly for private use and partly for his profession, so only his work related usage would be
liable to be deducted of the car expenses. The individual could claim for deduction as per
taxation rulings TR 97/7. It will happen when he carries work related equipment or travels for
attending meetings or conferences, delivery or collection of supplies or travel between two
separate places of employment say the client’s premise4.
The individual has the option to claim deduction under the logbook method which would be
provided as per the proportion of the usage of the vehicle for work related purpose. The expenses
in this case would consider the running expenses of the vehicles and its depreciation worth. The
logbook need to be maintained for a minimum period of 12 weeks and has the probability to
claim fuel and oil expenses on the basis of the odometer records of the car and there would be
other written expenses of the car as well.
Expenses –
If the individual operates from home and has a dedicated working area at his home he is entitled
to have deduction on the running expenses say buying home office equipment like computers,
printers and furniture and fittings. In this case the maximum deduction would go unto $300 and
in case of any decline in worth for the items, an additional amount of $300 would be deducted.
4 Ato.gov.au, 2019. Car expenses. [Online]
Available at: https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/vehicle-and-
travel-expenses/car-expenses/
[Accessed 29 April 2019].