Can you claim mobile phone expenses? Yes, but …
want to know, can you claim mobile phone expenses?
The simple answer is largely yes! But in order to actually make your claim, you must have not only incurred the expense for work related purposes, but you must also be able to substantiate your claim!(Please note we are focusing on work related tax deductions, and while similar principles apply for business related deductions, they are not addressed in this post.)
Deductibility
If you incur mobile phone expenses for work purposes those expenses are considered deductible against the income earned from your work under the “general” deduction provisions of the Income Tax Assessment Act 1997 (“ITAA97”) at section 8-1.However, if the phone is used for both work and private use, you will need to work out (ie. apportion) the amount that reasonably related to your work use.Further, if you have been reimbursed by your employer for your work related mobile phone expenses, the component that has been reimbursed is no longer deductible (ie. If all has been reimbursed, there is no deduction able to be made, if your employer reimbursed only some of the expenses you incurred, you may still be able to claim the balance.)Of course, if the mobile phone is provided by your employer, and they are billed for the usage, you definitely can not also claim those costs. You must be the one who is out of pocket, net of reimbursements, in order to make a claim.
Substantiating Your Claim
In order to make a claim, you must also be able to provide evidence (if asked) that you incurred the expense.For those who’s mobile phone work use is “incidental” and the deduction claimed is not more than $50 in total for combined mobile phone, home phone and internet, the following ‘safe harbour’ rates can be used to calculate the deduction –
- $0.25 for calls from a landline
- $0.75 for calls from a mobile
- $0.10 for text messages from a mobile
However, while using this method removes the requirements below for larger claims, you must still be able to prove, if asked, that you incurred the claimed expenses and that they were work related (ie. be able to identify the calls on your bill or a diary entry documenting when the call was made for work purposes).The ATO advises that if you wish to claim more than $50 for combined mobile phone, home phone and internet expenses there are more onerous evidence requirements …
- Firstly, you must be able to provide evidence that your employer requires and/or expects you to use your mobile phone for work related purposes. This does not simply include your employer being able to contact you as is the case for all employees. There must be a greater requirement for your use of the mobile phone, in particular for you to be making calls and therefore incurring costs.
- Secondly, you must keep records for a four (4) week “representative” period in each income year. So this means the four weeks you choose to keep records, should be representative of normal circumstances throughout the year. Similarly, the records must be re-done for each year, they can’t carry over to future years.
- Thirdly, you must determine your method of apportionment using a “reasonable basis”. Guidance is provided as follows –
- If calls are itemised on your bills – Over the four week representative period, you must review and identify all work related calls and determine what percentage of overall call costs are work related versus private.
- If calls are not itemised on your bills – Over the four week representative period, you must keep a record of all calls (ie. using a diary) and then calculate the percentage of calls that are work related versus private (of course in this case you need to work based on number of calls as it won’t be possible to work on the cost of each individual calls as above).
- Don’t forget, if you take time off work for holidays or other reasons, your four week representative period won’t be representative of that period, and allowance will need to be made for the time off (ie. if your percentage calculated above is for 25% work use, but you took a month off work, you could only claim 25% of your mobile phone costs for 11 months of the year, not the full 12!)