Many of us pick up our mobiles to make work-related calls and texts when we’re on-the-go each day, but when it comes to tax time, this may be an expense you’ve put in the “too hard” basket. Before you file your tax return this year, find out what you need to do to claim work-related phone calls so that you can (legally) squeeze the most out of your deductions.
To make a tax-related claim for your mobile use, you must prove two things: that the mobile use was work-related and the amount of work-related mobile use. Essentially, this means you need to identify how much of your usage is work-related and how much of it is for personal use. You can do this by disclosing the number of calls as a percentage of total calls, or the duration of work-related calls as a percentage of the duration of total calls.
You can generally keep tabs on your work-related mobile use by:
- Creating a physical or electronic log of mobile use and history;
- Holding onto your bills that reflect mobile usage and associated costs; or
- Providing evidence that your employer expects you to make work-related calls (e.g. contacting clients) using the nominated mobile handset.
How to work out the nitty gritty
As there are so many different mobile phone plans available on the market, you need to decide which method will work best for you when it comes to estimating your mobile phone usage.
If you’ve kept your work-related phone usage to a minimum, and you’re not claiming more than $50 in a given year, then you can make a claim relatively easily as the Australian Tax Office won’t make you jump through hoops to substantiate your claims.
You can claim $0.75 each for work calls made from your mobile, and $0.10 each for text messages sent from your mobile.
For a claim that exceeds $50 in mobile phone costs, and where you receive an itemised phone plan, you need to keep a record for a four-week representative usage period to support your usage claims, which you can then calculate as an average over the financial year.
As mentioned above, the ATO says you can work out a percentage using a reasonable basis which may include:
- The number of work calls as a percentage of total calls;
- The duration of work calls as a percentage of total calls; or
- The amount of data downloaded for work reasons as a percentage of total downloads.
For example, if you had a $75 monthly business phone plan, which includes $500 worth of calls and 2.5GB of data and you receive an itemised plan, you can work out your mobile usage over a four-week representative timeframe.
If you identify that 50 out of 200 (25%) calls you made over the four-week period were work-related, and if you worked for 10 months during the financial year (having two months leave for an overseas trip), you could potentially claim a deduction of $187.50 (25% x $75 x 10 months).
How about mobile phone depreciation?
In some cases, you may be able to claim depreciation on your mobile phone but this depends on your usage. If you purchased a mobile handset that you only use for work purposes, it may be entirely claimable but you’d need evidence to prove that you never used it for personal reasons!
Bearing in mind that a mobile handset could be considered a “tool” for depreciation, the way you claim for it will depend on how much you paid for it outright. If you buy a mobile for $300 or less, it could be claimed relative to proportional use (as long as you pass the usage tests!). On the other hand, if you bought a mobile handset for more than $300, you can’t claim the full deduction in a financial year but instead you can claim it depending on the fall in value.
Obviously, if your employer provides you with a mobile phone and is billed for your usage, then you can’t make a claim. The same goes even if you pay for your usage and then are later reimbursed by your employer.
No matter how small, it’s worth claiming work-related phone calls in your tax return this financial year — each dollar can really add up!
Fred Schebesta is the chief executive and co-founder of finder.com.au, one of Australia’s largest financial comparison websites.