Claiming mobile phone, internet and home phone expenses
If you use your own phones or internet for work purposes, you may be able to claim a deduction if you paid for these costs and have records to support your claims.
If you use your phones 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
You need to keep records for a four-week representative period in each income year to claim a deduction of more than $50. 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 will also help you demonstrate that you are entitled to a deduction.
When you can’t claim a deduction for your phone
Casual employees
Casual employees are not ‘at call’ employees and do not derive assessable income until they commence performing their duties at their place of employment. If you are a casual employee, you cannot claim a deduction for telephone rental expenses as there is no connection to your employment.
Employer provided phone
If your employer provides you with a phone for work use and is billed for the usage (phone calls, text messages, data) then you are not able to claim a deduction. Similarly, if you pay for your usage and are subsequently reimbursed by your employer, you are not able to claim a deduction.
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 where you receive an itemised bill, you need to determine your percentage of work use over a four-week representative period which can then be applied 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
- the amount of time spent on work calls as a percentage of your total calls
- the amount of data downloaded for work purposes as a percentage of your total downloads.
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 which 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. When 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 can then be applied 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 – eg if your work-related use results in you exceeding your monthly cap – if you would have already been charged for exceeding your monthly cap due to personal downloads it would be unreasonable to claim for the additional costs incurred.
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 – eg if your work-related use results in you exceeding your monthly cap– if you would have already been charged for exceeding your monthly cap due to personal calls it would be unreasonable to claim for the additional costs incurred.
Example 1: Apportioning bundled services
Samantha has a $100 per month home phone and internet bundle. The bill identifies that the monthly cost of Samantha’s phone service in her bundle is $40, and her internet service is $60. Samantha 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.
Samantha worked for 11 months during the income year, having had one month of leave.
Based on her itemised accounts, Samantha determines that the work-related use of her mobile phone is 20%. Samantha also uses her home internet for work purposes and based on her use she determines that 10% of her use is for work. Samantha does not use her home phone for work calls.
As the components are part of a bundle Samantha 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 as identified on her bill
Home phone
Samantha 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
Home internet use
10% work-related use × $60 per month
= $6 work-related use per month × 11 months
Samantha can claim $66
Mobile phone use
20% work-related use × $80
= $16 per month × 11 months
Samantha can claim $176
In her tax return Samantha claims a deduction of $242 for the financial year ($66 home internet use + $176 mobile phone use)
Samantha cannot claim work-related use of her home phone as she did not use it for work.
Phone and internet expenses
You can claim a deduction for the cost of work-related phone calls you make, including calls from mobile phones. You can also claim the work-related proportion of your phone rental (home phone) if you can show you were on call(only if home phone is your listed contact number and not your mobile) or were regularly required to phone your employer or clients while away from your workplace.
Work-related calls may be identified from an itemised account. If an itemised account is not provided by the phone company, records (such as diary entries) covering a representative four-week period will be accepted as establishing a pattern of your phone use for the entire year. You can also apply this percentage of work use to your phone rental costs, to apportion the amount of rental costs (home phone) you can claim. If you only use your mobile phone for work calls then home rental cannot be claimed.
You can’t claim a deduction for the cost of:
- connecting a phone or mobile phone, as it is a capital expense
- an unlisted phone number (silent number) as it is a private expense.
Example: calculating the apportionment of phone expenses
Lily uses her mobile phone for work purposes. She is on a set mobile phone plan of $49 a month and rarely exceeds the plan cap.
Lily receives an itemised account from her phone provider each month by email that includes details of the individual calls she has made.
At least once a year, and sometimes two or three times, Lily prints out her account and highlights the work-related calls she has made. She makes notes on her account for the first month about who she is calling for work – her employer, parents and so on.
Out of the 200 calls she makes in a four-week period, she works out that 30 calls (15%) are for work and applies that percentage to her cap amount of $49 a month. The other two months Lily reviews are consistent with this.
Since Lily was only at work for 38 weeks of the year, she calculates her work-related mobile phone expense deduction as follows:
(By only working 38 weeks in the year, this equates to 8.8 months.)
8.8 months × $49 × 15% = $65
Internet usage can be determined by either:
Internet time utilised for personal versus work related usage
Internet down loads for personal versus work related usage