I think this is the optimal tax set up for me as a self-employed professional services worker but I was hoping that someone who is clever could provide input on whether any of my reasoning is wrong?
Here's what I plan to do (some of these steps are already in place, but some are not)
1. Set up a spare bedroom in my PPOR as a dedicated home office, work from there 51% of the time so that it's my principal place of work
2. Since I need to have conferences with clients in the city, store work files, and attend business events etc, I am obliged to rent office space in the CBD, but I rent a modest room to minimise the expense
3. I either take public transport or drive into work - truth be told, my car is mainly a weekend toy, and I plan to keep it that way, so mostly I take PT. But when I do drive into work, that "commuting" counts as business use since I'm driving from my principal office to a secondary office.
The tax effects of this are:
- All CBD office related expenses are fully deductible
- All home office expenses including running costs, furniture depreciation and mortgage costs are pro rata deductible according to floor space (assuming the study is 100% used by me for work, which it is)
- Most of my vehicle related expenses are deductible according to the logbook method, since most of my driving (including my commute) now counts as business use.
In other words, I have transferred a chunk of my natural private costs (home/car) into deductible expenses. At the same time, I have a simple non-Part IVA reason as to why I would have this set up (doing so allows me to avoid a commute 3 days a week, allows me to make use of my unused spare bedroom, and there is a roughly 50/50 split of work that can be done from home versus work that requires conferencing in town).
What do you guys think?