Claim a tax refund when you use your mobile phone for work purposes.
If we can use a small amount of effort to work out how to obtain an accurate mobile phone tax deduction, your tax refund will increase for the effort – time well spent!
How is my mobile phone usage even tax deductible?
If you use your mobile phone for work, then it is likely that it’s tax deductible. This is because you are using it to generate your taxable income. Assuming we can prove the nexus between earning your income and using the mobile phone, then we have a mobile phone tax deduction. Sales is one of the easiest, but also a hospitality work who uses a rostering tool like deputy or receives calls from her manager regarding shifts, applies for a responsible service course online are all good examples of how most employers now expect their employees to use their mobile phone for work.
Part work, part personal
If this is you, it’s important to know that you can’t claim a mobile phone tax deduction for the entire cost of your mobile phone or phone plan, unless you solely use it for work purposes. If you bought the phone outright, you can’t claim a deduction for the whole purchase cost but you depreciate the phone over its useful life (3 years). If you’re on a plan, you can only claim the portion of the bill that relates to work-related calls and data usage.
What all this means is we need to determine what percentage of your phone usage is work related to get the mobile phone tax deduction correct. There are two methods working this out.
Method 1 – mark up your phone bill
Although this is less common these days, a good way to work out your percentage of mobile phone usage for work is to mark up a phone bill and use this as a basis for your claim. Marking out mobile phone bills involves reviewing each bill and identifying the work-related calls and data usage, then calculating the percentage of the total phone bill that those calls and data usage represent. This can be quite tiresome obviously, but is a very accurate way of calculating your mobile phone tax deduction.
Method 2 – logbook or percentage based claim
Keeping a logbook involves recording all your phone usage (both work use and personal) for a month, then using that information to calculate the percentage of your phone bill that relates to work-related usage for the entire year. Based on this usage we can easily calculate your mobile tax deduction by calculating your total mobile bills for the year and using the percentage calculated to work out your mobile phone tax deduction.
If you also use your phone for data, or internet usage, you can apportion that cost as well, using the same methods mentioned above. This means that you’ll need to keep a logbook of your internet usage as well, to determine the work-related portion of your phone bill.
Example 1 – simple percentage based claim
| We’ve found the easiest way to demonstrate phone usage is look at your screentime. Easy to find on both Apple and Android mobile phones. If you look at the example below, you can see that out of 3 hours and 41 minutes of screen time, 18 minutes of this was outside work hours. Here we can see a 92% work usage on this day. If there are 22 working days in a month of 30 days, we can easily calculate an estimate of work related expenditure for the month: 92% x 22/30 days = 67% work use. In this example it’s easy to demonstrate that if your phone bill is $100 a month, you can use this to generate a $67 a month tax deduction, or $804 annual mobile phone tax deduction. That’s sure to increase your tax return this year! |
Example 2 – keeping a log book
Let’s take a look at another example to better understand how to calculate the tax deduction.
John uses his personal mobile phone for work purposes and pays $125 a month for his phone plan. He keeps a logbook for a month and finds that 75% of his phone usage is during work hours or work-related outside of hours. He also uses his phone for work calls and work internet usage.
To calculate the mobile phone tax deduction for his phone bill, John can use the following formula: $125 (total phone bill) x 75% (work-related phone usage) = $93.75
This means that John can claim a mobile tax deduction of $93.75 for his phone bill each month. Over the year that is big tax deduction of $1,125. John has a big mobile phone tax deduction in this example! It’s important to keep accurate records of your phone and internet usage, as the ATO may ask for evidence to support your claims. In the case of an ATO audit, your will need to produce the records you’ve used to demonstrate your mobile phone tax deduction.
No need to be worried about the ATO however when you file your tax return through Rider Tax Accountants. They will always contact your Tax Agent first and then you’re in professional hands for it to be dealt with simply and easy with minimal fuss. That’s one of the benefits of a tax filing using a Registered Tax Practitioner.
Mobile phones are tax deductible
Claiming phone calls as a tax deduction in Australia requires proof of your work related apportionment by record-keeping. This blog should give you a good understanding of the rules and guidelines. By following the methods outlined above and keeping accurate records, you can ensure that your tax deduction claims are valid and that you receive the maximum possible tax refunds based on your phone and internet usage.
