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

Answer

Silvia’s home office and work library should be classified as a private study. This is because it cannot be deemed a place of business as she still has access to an on-campus office, and it is not capable of facilitating all of her duties as an academic as she isn’t able to see students in her home office. Rather, like in FCT v Faichney&Handley v FCT (If the office is matter of convenience, a portion of running expenses only are deductible), the private study is used due to her convenience. Therefore, only her running expenses, i.e. electricity, cleaning, and home telephone (mobile telephone is not a home facility and is not included), can be deducted.

Deductions need to be based off how many days she works from home. The mobile phone is used in her course of work, and should therefore be included in the deductions.

Expense	Cost	Deductible amount
Electricity	1,600 x 5/7	1143
Cleaning	2,500 x 0.2	500
Home telephone	2,000 x 0.1	200
Mobile telephone	1,250 x 0.5	625
Total deductible amount	2,468