With tax time fast approaching, now is a good time to review those tax deductions that are often easily forgotten such as mobile phone expenses.
Mobile phone expenses can generally be claimed as a tax deduction provided they are used for work purposes, such as receiving or making work calls. When claiming expenses you will need to work out the percentage that reasonably relates to your work related use, not your entire phone bill.
The ATO requires you to substantiate these claims by keeping records for a 4-week representation period in each income year to claim a deduction of more than $50. Records may include diary entries, including electronic records and bills. The Tax Office also suggests including evidence that your employer expects you to work at home or make some work-related calls to demonstrate your entitlement to the deduction.
When apportioning the work use of your phone, you will need to use one of the following methods:
If you are not claiming a deduction of more than $50 in total and your work use is incidental, you may make a claim based on the following:
- $0.25 for work calls made from your landline
- $0.75 for works calls made from your mobile
- $0.10 for text messages sent from your mobile
Usage is itemised on your bills
For phone plans with an itemised bill, you need to determine your percentage of work use over a 4-week representative period which then can be applied to the full year. You can work out the percentage by the number of work calls made as a percentage of total calls, or the amount of time spent on work calls as a percentage of total calls, or the amount of data downloaded for work purposes as a percentage of your total downloads.
Usage is not itemised on your bills
If your plan is not itemised, you can determine your work use by keeping a record of all your calls over a 4-week representative period and then calculate your claim using a reasonable basis.
Bundled phone plans
Phone services are often bundled and can be used by other members in your household. If other members use the services, you need to take into account their use in your calculation. You will need to identify work use over a 4-week representative period which can be applied to the full year. A reasonable basis must be used to work out the work-related use such as:
- The number of work calls as a percentage of total calls
- The amount of time spent on work calls as a percentage of your total calls
- Any additional costs incurred as a result of your work-related use