ATO scrambles to close WFH loophole as Aussies claim thousands

"Australian renters could soon claim thousands of dollars in tax deductions if they work from home, following a bombshell judgement by the Administrative Appeals Tribunal (AAT). The Australian Tax Office (ATO) is fighting to overturn the decision it says could create a massive hole in the federal budget and cost taxpayers billions. After ABC radio presenter Ned Hall claimed the occupancy costs of a second bedroom in his apartment, from which he worked during the pandemic, at a cost of $5878 in expenses."

""The ATO has appealed the decision to the Federal Court," a spokesperson said. "In the meantime, the ATO has published an interim decision impact statement that provides the ATO's view on the tribunal decision pending the finalisation of the appeal process." The ATO has warned against anyone claiming working-from-home deductions in their tax filing this year, as they may be forced to pay back more tax if the decision in Hall's favour is overturned."

"Speaking to The Herald Sun on Monday, Dale Boccabella from the Australian School of Business at the University of NSW, said the ATO's Federal Court case against Hall has significant implications for Aussies. "It's a straight-out matter of getting a deduction for basically part of your home," he told the publication. "But you've really got to set aside the place (as an office), and no one else in the family really uses it in"

The Administrative Appeals Tribunal upheld a claim allowing a renter to deduct occupancy costs for a converted second bedroom used as a home office during the pandemic. The specific claim involved $5,878 in expenses for conversion and occupancy. The Australian Tax Office has appealed the AAT decision to the Federal Court and has published an interim decision impact statement. The ATO warns taxpayers not to claim similar deductions until the appeal is finalised because claims may need to be repaid. Census data show about one-third of Australian households rent, raising potential budgetary exposure if many claims succeed. An academic noted deductions require genuinely setting aside a space exclusively for work.

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