The Australian Taxation Office (ATO) has released an updated version of Practice Statement PS LA 2001/6, its guidance on calculating and substantiating home office running expenses and electronic device expenses that are claimed as tax deductions.

The basic principles have been amended to emphasise that you must physically incur the expenses you claim, and there must be an actual connection between your use of a home office or device, and your source of income. On the other hand, the requirement that your income-producing use must be substantial – not merely incidental – has been removed.

Evidence of Expenditure and Extent of Deductibility

The level of evidence required to prove that expenditure has been incurred is less than that needed to to substantiate the expense. In particular, the ATO accepts that bank/credit card statements can be used to demonstrate that expenditure has been incurred. As an example, a bank statement in your name clearly showing a payment to your electricity provider is now acceptable evidence that electricity expenditure has been incurred.

The ATO says that youcan substantiate their deductible work use proportion by providing:

• Evidence of the proportion of deductible use for the whole income year
• Records showing your detailed usage pattern over a representative period
• A reasonable estimate, but only in relation to a small claim for home office running expenses