Question

Silvia is a teacher employed by SCHE Education at their Melbourne campus. She lives in Pakenham with her family on the outskirts Melbourne about 60 kilometres from the campus. Silvia only attends the campus on Thursdays and Fridays when she takes her classes and the remaining three days a week she works from home. She prefers to work from home because she dislikes the long commute and because she feels that she can research more effectively from home. She only sees students in her office at the campus on Thursdays and Fridays. All student contact on the other days is via email.

Silvia’s home office and work library occupies 20% of the total space in her home. Her outgoings in relation to her home for the current financial year are as follows:

• Rent – $31,200
• Electricity and heating costs – $1,600
• Cleaning lady – $2,500
• Home telephone (10% of which is for university use) – $2,000
• Mobile telephone bill (50% of which is for university use) – $1,250

Required:

Calculate how much of the above outgoings are a deductible expense for Silvia.

Answer 1

Silvia done Work from home 3days per week.

So we have to divided the entire expenses into Fixed cost and variable cost.

In above expenses Rent and Cleaning Lady Salary are fixed cost and the remaining are variable cost.

Fixed cost is incurred wather sivia done work from home or not but Variable costs are incurred during the period of work from home.

Calculation of Deductible Expense

Fixed costs

Total Rent -$31200

Deductiable Rent@20%= +31200*20%

=$6240.

Cleaning lady Salary – $2,500

Deductible Salary@20%= +2500*20%

=$500.

Note:work library occupies 20% of the total space in her home so 20% deduction available.

Variable Costs:

Silvia works 3days per week so total working days in the year= 156days

Total home telephone cost=$2,000 (10% of which is for university use)

Deductible cost=+2000*10%*156/365

=$85.48

Total Mobile telephone bill (50% of which is for university use) – $1,250

Deductible cost = +1250*50%*156/365

=$267.12

Electricity and heating costs = $1,600

Deductible cost@ 20%=+1600*20%*156/365

=$136.77

Total available expenses=+136.77+267.12+85.48+500+6240

=$7229.37.

Therefore Total deductible Expenses=$7229.37.