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Mobile phones have undoubtedly become an important part of daily life – and they’ve become crucial for communication by video, voice and text message both in our personal lives and in our work. With more people working from home or in remote offices than ever before, phones have become even more indispensable.
If you use your own phone or internet for work purposes, you may be able to claim a deduction if all of the following conditions apply:
you spent the money yourself
the expense is directly related to earning your income
you must have a record to prove it.
You can't claim a deduction where you haven't incurred any expenses, or you're reimbursed for any costs by your employer.
For employees working from home as a result of COVID-19, the ATO has specific information available about claiming home office expenses, including phone and internet expenses.
If you use your phone or internet for both work and private use, you will need to work out the percentage that reasonably relates to your work use.
Substantiating your claims
To claim a deduction of more than $50, you need to keep records for a four-week representative period in each income year. These records may include diary entries, including electronic records, and bills. Evidence that your employer expects you to work at home or make some work-related calls from home will also help you show that you are entitled to a deduction.
When you can’t claim a deduction for your phone
Employer provided phone
If your employer provides you with a phone for work use and they are billed for the usage (phone calls, text messages, data) then you can't claim a deduction. Similarly, if you pay for your usage and are then reimbursed by your employer, you can't claim a deduction.
Costs you incur before work commences
If you use your phone to seek employment you can't claim a deduction as you are not yet generating income from the use of the phone.
Similarly, if you are a casual employee and an employer calls you to ask you to work, or you call them to check on work availability, you can't claim a deduction. The cost is not considered to be one that directly relates to your income producing activities. Instead, it's an activity that is putting you in a position to earn that income.
You can only claim a deduction for the portion of your phone use when you're earning assessable income and your employer requires you to use your phone directly in earning that income.
How to apportion work use of your phone
As there are many different types of plans available, you will need to determine your work use using a reasonable basis.
Incidental use
If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyse your bills:
$0.25 for work calls made from your landline
$0.75 for work calls made from your mobile
$0.10 for text messages sent from your mobile.
Usage is itemised on your bills
If you have a phone plan with an itemised bill, you need to work out your percentage of work use over a four-week representative period, which you can then apply to the full year.
You need to work out the percentage using a reasonable basis. This could include the:
number of work calls made as a percentage of total calls
amount of time spent on work calls as a percentage of your total calls
amount of data downloaded for work purposes as a percentage of your total downloads.
Example: Phone calls are itemised on your bill
Julie has an $80 per month mobile phone plan, which includes $500 worth of calls and 1.5GB of data. She receives a bill that itemises her phone calls and provides her with her monthly data use.
Over a four-week representative period, Julie identifies that 20% of her calls are work-related. She worked for 11 months during the income year, having had one month of leave. Julie can claim a deduction of $176 in her tax return (20% × $80 × 11 months).
Usage is not itemised on your bills
If you have a phone plan where you don’t receive an itemised bill, you determine your work use by keeping a record of all your calls over a four-week representative period and then calculate your claim using a reasonable basis.
Example: Non-itemised account Ahmed has a prepaid mobile phone plan that costs him $50 per month. Ahmed does not receive a monthly bill so he keeps a record of his calls for a four-week representative period. During this four-week period, Ahmed makes 25 work calls and 75 private calls. Ahmed worked for 11 months during the income year, having had one month of leave.
Ahmed calculates his work use as 25% (25 work calls ÷ 100 total calls). He claims a deduction of $138 in his tax return (25% × $50 × 11 months).
Bundled phone and internet plans
Phone and internet services are often bundled. If you are claiming deductions for work-related use of one or more services, you need to apportion your costs based on your work use for each service.
If other members in your household also use the services, you need to take into account their use in your calculation.
If you have a bundled plan, you need to identify your work use for each service over a four-week representative period during the income year. This will allow you to determine your pattern of work use, which you can then apply to the full year.
A reasonable basis to work out your work-related use could include:
Internet
the amount of data downloaded for work as a percentage of the total data downloaded by all members of your household
any additional costs incurred as a result of your work-related use, for example, if your work-related use results in you exceeding your monthly cap.
Phone
the number of work calls made 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 calls, for example, if your work-related use results in you exceeding your monthly cap.
Example: Apportioning bundled services Sujita has a $100 per month home phone and internet bundle. The bill identifies that the monthly cost of Sujita’s phone service in her bundle is $40, and her internet service is $60. Sujita brings in her mobile phone plan of $90 per month and receives a $10 per month discount. Her total costs for all services are $180 per month.
Sujita worked for 11 months during the income year, having had one month of leave. Based on her itemised accounts, Sujita determines that the work-related use of her mobile phone is 20%. Sujita also uses her home internet for work purposes and based on her use she determines that 10% of her use is for work. Sujita does not use her home phone for work calls.
As the components are part of a bundle Sujita can calculate her work-related use as follows:
Step 1 – work out the value of each bundled component
Mobile phone: $90 per month minus the $10 per month discount = $80 per month
Internet: $60 per month
Home phone: Sujita does not need to determine the home phone costs as she does not use this service for work purposes.
Step 2 – apportion work-related use
Mobile phone use: 20% work-related use × $80 per month × 11 months = $176
Home internet use: 10% work-related use × $60 per month × 11 months = $66
In her tax return, Sujita claims a deduction of $242 for the financial year ($176 mobile phone use + $66 home internet use).
Example: Apportioning bundled services Des has a $90 per month home phone and internet bundle, and unlimited internet use as part of his plan. There is no clear breakdown for the cost of each service. By keeping a record of the calls he makes over a four-week representative period, Des determines that 25% of his calls are for work purposes. Des also keeps a record for four weeks of the data downloaded and determines that 30% of the total amount used was for work.
Des worked for 11 months during the income year, having had one month of leave. As there is no clear breakdown of the cost of each service (calls and downloads), it is reasonable for Des to allocate 50% of the total monthly cost to each service.
Step 1 – work out the value of each bundled component
Internet: $45 per month ($90 ÷ two services)
Home phone: $45 per month ($90 ÷ two services)
Step 2 – apportion work-related use
Internet: 30% work-related use × $45 per month × 11 months = $149
Home phone: 25% work related use × $45 per month × 11 months = $124
In his tax return, Des claims a deduction of $273 ($149 + $124) for the year.
Purchasing a smartphone, tablet or other electronic device
If you bought a smartphone, tablet or other electronic device and you use it for work you can claim a deduction for a percentage of its cost.
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