When is an area of a home a place of business rather than a private study?

Place of business:

Paragraph 5 lists some of the factors which may indicate that a part of a home has the character of a place of business. The existence of any of these factors or a combination of them will not necessarily be conclusive in ascertaining the character of an area used as a home office. Rather the decision in each case will depend on whether, on a balanced consideration of:

• the essential character of the area;

• the nature of the taxpayer's business; and

• any other relevant factors, the area constitutes a "place of business" in the ordinary and common sense meaning of that term.

The absence of an alternative place for conducting income producing activities has also influenced a court or tribunal to accept a part of a taxpayer's residence as a place of business. Examples include:

• a self employed script writer using one room of a flat for writing purposes and for meetings with television station staff ( Swinford's Case) ;

• an employee architect conducting a small private practice from home ( Case F53 , 74 ATC 294; Case 65 , 19 CTBR(NS) 452);

• a country sales manager for an oil company whose employer did not provide him with a place to work ( Case T48 , 86 ATC 389; Case 47 , 29 CTBR(NS) 355).

In each of these cases the taxpayer was able to show that, as a matter of fact, there was no alternative place of business, it was necessary to work from home, and that the room in question was used exclusively or almost exclusively for income producing purposes.

In circumstances such as those referred to in paragraph 12, a place of business will exist only if:

• it is a requirement inherent in the nature of the taxpayer's activities that the taxpayer needs a place of business;

• the taxpayer's circumstances are such that there is no alternative place of business and it was necessary to work from home; and the area of the home is used exclusively or almost exclusively for income producing purposes.