Thread by @Voice4Victoria

This story went off today and it was worth going and having a look at the Tax Act and SRO ruling referred to in here. No idea how Allan could possibly be confident in saying those WFH won't get caught up with land tax issues, or play off the issue - there genuinely is no clarity.

https://twitter.com/theheraldsun/status/1959735247542915559

To recap: key issue is whether you could lose part of your 'home' aka PPR land tax exemption due to “substantial business activity" in the residence by WFH. The Act & SRO ruling list factors for this test. It's not new but it’s relevant if WFH is looked at with minimum set days.

The test factors for "substantial business activity" include:
– Employees/contractors at the property
– Part of the land allocated solely for business
– Floor space used for business
– The income generated from that property
– Proportion of your total income from those activities

Further context. Section 62 of the Land Tax Act 2005 sets this framework - but states no figures specifically. The SRO’s ruling aka precedent (LTA-001v2) adds that if >$30,000 gross income is derived from the PPR, it will generally be considered “substantial business activity.”

Example from the SRO ruling: a self-employed web designer uses 12% of the home for business but earns >$30k. Because the space is dedicated to business & council approved it, the Commissioner considers it substantial. PPR exemption only applies to the residential % of the home.

Another example: an accountant works "occasionally" (quote) after hours from a garage office on her PPR. She claims the office deductions, but the space is also partly private use. Taken as facts together, the SRO did not consider it “substantial business activity.”

Interestingly the Act itself does not specify any specific financial number like 30k, that’s only from the SRO ruling. The legal test still technically hinges on ONLY Sect 62: whether land is used solely for business, proportion of space, income derived, and share of total income

Why is this relevant - the 30k income figure isn't really a safeguard or set minimum in the legislation. It's just one factor the SRO uses. The Commissioner can still consider floor space, proportion of income and other factors to decide if the business use is "substantial".

To do the maths: if you're full time and WFH only 2 days a week, to earn 30k from home = a full-time salary of just 75k. So many office or admin workers could theoretically be caught under this test if they earn 75k or above, which will capture a fair chunk of workers.

There’s no carve-out either. The Act & the SRO’s own ruling examples make NO distinction between employees & business owners. There genuinely appears to be nothing to stop an employee earning enough WFH being treated the same way as a 'business' from home, for land tax purposes.

TLDR; Allan does have some explaining to do. She claims employees potentially getting caught up in land tax issues is "rubbish".. but by every measure, nothing appears to exist to actually stop employees WFH being caught up by the SRO rules. That should be stated honestly to ppl.

Exact response from Allan today: “working from home has been a feature of workplace arrangements for a number of years now. There’s no change to the tax settings.”
True. But it leaves out whether WFH workers are still subject to SRO assessment.. & nothing says they wouldn’t be.