Claiming mobile phone, internet and home phone expenses

Claiming mobile phone, internet and home phone expenses

The ATO has updated the information on claiming mobile phone, internet and home phone expenses on 20 Augusts 2015.

If the taxpayer uses their own phone(s) or internet for their working purposes, they may eligible to claim a deduction if you paid the costs and have the supporting document. If the taxpayer uses for both work and private, you need to work out the reasonable percentage that relates to your work use.

According to the ATO, taxpayers need to keep records for a four-week representative period in each income year if claiming the deduction of more than $50. These records may include diary entries, including electronic record, and bills. Evidence that a taxpayer’s employer expects them to work at home or make some work-related calls will also help the taxpayer demonstrate that they are entitled to a deduction.

How to calculate work use of your phone

1. Incidental use

If you are not claiming a deduction of more than $50 in total, you may make a claim based on the following without analysing the bills:

  • $0.25 for work calls made from your landline,
  • $0.75 for work calls made from your mobile, and,
  • $0.10 for text messages sent from your mobile.

2. Usage is itemised on your bills

The taxpayer has an $60 per month mobile phone plan. Over a 4-week representative period, the taxpayer identifies that 25% are work-related.

Therefore, the deduction is 25% x $60 x 12 months = $180 in the tax return.

3. Usage is not itemised on your bills

The taxpayer has a prepaid mobile phone plan $30 per month. The taxpayer keeps a record of his calls for a 4-week representative period. During the period, he makes 28 work calls and 72 private calls.

The calculation is 28% (28 work calls /100 total calls) x $30 x 12 months = $100.80 in the tax return.

4. Bundled phone and internet plans

The taxpayer has a $100 per month home phone and internet bundle. By keeping a record of the calls over a 4 week representative period, he determines that 28% of his calls and 32% of data downloaded are for work purposes.

As there is no clear breakdown of the cost of each service, it is reasonable to allocate 50% of the total cost to each service.

Step 1 – work out the value of each bundled component

Internet

$50 per month ($100/2 services)

Home phone

$50 per month ($100/2 services)

Step 2 – apportion your work related use

Home phone

28% work related use x $50 per month x 12 months = $168

Internet

32% work related use x $50 per month x 12 months = $192

In his tax return Des claims a deduction of $360 ($168 + $192) for the year.

Reference:

1. CPA 2015, CPA Australia Tax Update, viewed 20 August 2015

<http://view.e.cpaaustralia.com.au/?j=fe4e16767c6c0274741c&m=fe5f15707d6002757616&ls=fde713727c6d017e74117872&l=fe9215797166077a76&s=fe1715777d630275721177&jb=ff981576&ju=fe30167471660475761c70>

2. ATO 2015, Claiming mobile phone, internet and home phone expenses, viewed 20 August 2015

<https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Claiming-mobile-phone,-internet-and-home-phone-expenses/>

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