Question

Discuss the deductibility of the $1 000, $4 000 and $450 amounts for D

D is a lawyer who has an office. On Friday he takes care of his children and works from home. He has converted one of the bedrooms into a home office and it occupies about 10% of the floor space of his house. This financial year he incurs the following expenses: $1 000 internet costs, $4 000 interest payments on his mortgage, and a $450 accountant fee paid to his accountant for preparing his income tax return.

Answer 1

Since only 10% of his house has been used for his professional use, only 10% of the total common expenditure shall be attributed to the professional use and such amount shall be allowed as expenditure.

10% of the total internet cost of $1000 shall be allowed as deduction (ie: $100)

10% of the interest payment of $4000 shall be allowed as deduction (ie: $400)

Accountant fee paid shall be allowed as deduction if it is exclusively for his business/professional purpose, any fee paid for personal income tax return shall now be allowed.