The ATO has reminded taxpayers that, if they run their home-based business as a company or trust, their business should have a genuine, market-rate rental contract (or similar agreement) with the owner of the property.
The agreement will determine which expenses the business pays for and can claim as a deduction.
If there isn’t a genuine rental contract, there may be tax implications for the homeowner and the business for providing benefits to any individuals.
If an individual earns PSI, they may not be able to deduct some occupancy expenses.
If the business pays for or reimburses an employee of the business for some of the expenses of running the business from home, the employee can’t claim a deduction for those expenses in their individual income tax return.
Also, the business may have to pay FBT if it pays or reimburses the individual for certain expenses as an employee (although exemptions and concessions may apply to reduce the FBT liability), and may need to keep additional records for FBT purposes.