A recent decision by the Administrative Appeals Tribunal (AAT)—backed by radio presenter Ned Hall—has thrown Australia’s working-from-home deductions into the spotlight. Hall successfully claimed $5,878 in rent for a spare bedroom he used exclusively as a home office during the COVID-19 pandemic.
What the AAT Decision Means
By agreeing that his second bedroom qualified as a “main workplace,” the tribunal effectively opened the door for renters using a dedicated space at home to claim a portion of their rent as a business expense.
Why the ATO Is Alarmed
The Australian Tax Office fears this ruling could spark thousands of similar claims, potentially costing the Federal Budget billions. With nearly one-third of Australian households renting, even a small uptake could have serious fiscal consequences.
ATO’s Response & Appeal
- The ATO has launched an appeal in the Federal Court and released an Interim Decision Impact Statement, warning taxpayers of the risk of having to repay deductions if the appeal succeeds.
- Their official warning: Don’t rush to claim rent deductions until the appeal is resolved—it could backfire financially.
While the Hall decision puts a spotlight on potential rent deductions, the ATO’s official stance remains firm: employees generally cannot claim occupancy expenses—including rent, mortgage interest, council rates, land tax, or home insurance—when working from home.
When Rent May Be Claimable
According to the ATO’s “Occupancy expenses” guidelines:
- The area must have the character of a place of business:
- Clearly identifiable as a workspace
- Not readily adapted for private use
- Used exclusively or almost exclusively for work
- Regular visits from clients or customers may help support this
- Employer-mandated home work:
The arrangement must be necessary because your employer didn’t provide an alternative workplace. - Exclusive use:
The space can be used only—or close to only—for work during the claimed period.
To calculate a valid claim, you must:
- Apply floor-area apportionment (workspace vs. whole home).
- Use time apportionment if the space was used part-time.
- Keep detailed records and evidence of exclusive, employer-mandated usage.
Bottom Line: Reconciling Hall with ATO Reality
The AAT’s ruling on Ned Hall shows rent claims may succeed under narrow, documented conditions. But the ATO is actively appealing—issuing an Interim Decision Impact Statement that reinforces its longstanding position: renters should not claim occupancy expenses unless every strict ATO test is met.
That means:
- Your workspace must genuinely resemble a business premises
- Your employer must require home-based work
- The room must be used exclusively or almost exclusively for business purposes
- You must quantify usage with area and time splits
- You must back it up with robust evidence
Until the Federal Court rules, claiming such rent deductions carries risk. You could be faced with repayments, interest, or penalties if your claim doesn’t meet ATO criteria—or if the appeal succeeds.