A recent case, Hall and FCT [2025] ARTA 600, is making waves in the Australian tax community—and it could have big implications for employees who claim home office or car expenses in their tax return.
The AAT (Administrative Appeals Tribunal) found that the taxpayer in this case was entitled to claim occupancy and car expenses, ruling they were directly linked to earning assessable income. This goes against the ATO’s long-standing guidance on such deductions, and although the ATO is appealing the decision, the case raises important questions for taxpayers ahead of tax season.
What Was Claimed in the Hall Case?
In the Hall case, the taxpayer claimed:
- Occupancy expenses (e.g. rent, electricity for a dedicated home office)
- Car expenses (used for travelling between work-related locations)
The AAT agreed that these expenses were incurred to produce income, and therefore deductible under sections 8-1 and 28-12 of the Income Tax Assessment Act 1997 (ITAA 1997).
This is significant because the ATO has historically been strict about when home office or travel costs are deductible—especially for employees.
ATO’s Current Position (Still in Effect)
Despite the ruling, the ATO is not changing its approach yet. It has issued an Interim Decision Impact Statement, confirming that it:
- Disagrees with the AAT decision
- Is appealing the case
- Will continue to apply existing tax rulings, including:
- TR 93/30 – deductions for home office expenses
- TR 2021/1 – transport expenses for employees
- The Employee’s guide for work expenses
In other words, the ATO will continue to take a conservative stance on work-related deductions—at least until the appeal is resolved.
What Should You Do?
This case shows that the rules around claiming work-related expenses are complex and evolving. What one court sees as deductible, the ATO may not accept—leading to uncertainty for many employees, contractors, and small business owners.
To avoid making mistakes or missing out on legitimate deductions:
- Don’t assume your home office or car expenses are deductible just because you use them for work
- Keep detailed records of your work use, including diaries, logbooks and invoices
- Seek professional tax advice if your situation involves mixed-use assets or non-standard working arrangements
How Boa & Co. Can Help
At Boa & Co. Chartered Accountants, we specialise in helping employees and business owners understand what expenses they can safely claim—and which might trigger ATO attention. Especially in light of ongoing legal challenges like the Hall case, it’s more important than ever to:
- Get clear advice tailored to your work setup
- Prepare your deductions with confidence
- Avoid audits or disputes by following the latest ATO guidance
Whether you work from home, travel regularly for work, or manage a business with mobile teams, our expert tax advisors can help you maximise your refund while staying fully compliant.
Need Help With Your Work-Related Deductions?
Contact Boa & Co. Chartered Accountants today to ensure your tax return is accurate, ATO-compliant, and maximises your entitlements—especially during this time of legal uncertainty.
Call us on 1300 952 286, Email us at [email protected], or Visit www.boanco.com.au to book a consultation.