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Mobile Phone Expenses and the ATO

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At Knox Taxation and Business Advisory, in Boronia, we have all the answers when it comes to knowing how much of your mobile phone, phone and internet bills you can claim.

As if you don’t have enough due diligence to do in recording your Business and Personal tax expenses, our friends at the Australian Tax Office have tightened up the telephone cords, and are now asking you to put things on hold whilst you document your phone calls, internet time and other electronic equipment (for work), on top of how many scoops of washing powder you’ve used to wash your business shirts!  Details shmetails!  Unfortunately this new level of onerous and painful substantiation has only come into play recently.

At Knox Tax, we’re committed to keeping you on the line, to help you understand what it is you now need to do.  Here’s the latest from the ATO:

Mobile Phones and Your Rights to a Return on Tax

Now that Mobile Phones are your key to running a mobile ‘office’, some questions have arisen about just how much you can claim as an expense where they’re concerned.  Here at Knox Taxation and Business Advisory, in Boronia, we have the answers and all of the latest from the ATO – to help make sure your claims are compliant, and maximised within the ‘rules’.

Did you know:

  • Using your own phone(s) or internet, for work only – either during office hours or after hours – may entitle you to a deduction, as long as you can substantiate your use with documented records?
  • Using your mobile phone(s) and internet, for both private and work purposes, will allow you to make a claim for the proportional percentage that you used it for work for?

In order to make a claim of more than $50, in either of these circumstances, you’ll need to be able to show a four week period (in each income year) showing proof of your usage for work.  For example, you can table diary entries, phone accounts and electronic records.

Substantiation

If you have something to prove that you are ‘required’ to use your own phone and internet for work purposes, and work-related calls and business, you should also provide that evidence to support your claim.

Can I make a claim if my employer provides my phone?

Unfortunately for you – No, you can’t make a claim.  Your employer is being billed – not you.  The same applies if your employer is reimbursing you for your work-related personal phone usage.

Apportioning the use of your ‘work’ phone

This needs to be done on the basis of reasonable usage.

If you work incidentally and are not claiming more than $50 as a deduction, you might use the following formula (without having to analyse your phone accounts):

$0.25 for work calls made from your landline,
$0.75 for work calls made from your mobile, and,
$0.10 for text messages sent from your mobile.
(Source:  ATO, 20th August, 2015)

If your phone plan itemises your usage on your account, you should work out a reasonable percentage of use, by scanning a four week representative period, rather than analyse a full year’s worth of accounts.  For example, scan your bill and work out the following:

  • 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.  (Source:  ATO, 20th August, 2015)

Over the whole month, you may be able to determine that say 30% of your phone calls were work-related.  Confused?  Don’t worry.  Bring your bills into us at Knox Taxation and Business Advisory in Boronia.  We’ll help you do the calculations.

What if my phone bill isn’t itemised?

You’ll need to keep a log of the work-related calls over a four week representative period.  Jot them in your diary, or keep a separate spreadsheet.  For example, you may count 25 work calls and 75 private calls in the month.  Once you have your log, we’ll be able to help you work out the rest.

I have a bundled phone and internet plan.  How do I work that out?

Here, again, you’ll need to calculate your work-related usage, and your private usage, for both your phone calls and your internet – and how many other people in your household also access the same service.  Keep your log over a four-week period and keep good records.  It’s not as hard as it sounds.

For example, divide your usage along these lines (as suggested by the ATO, 20th August, 2015):

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.

Mobile 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.

Home Phone

  • Keep a record of when you’ve used the phone for work calls over the four week period as well.

It may work out that you’ve used 30% of your bundled mobile phone for work.  You may have used your internet 20% of the time, and your home phone may have been used to make say five calls in total.  Keep a record of how much time you’ve had off work for sickness and holidays as well, because this has to be woven into the calculations too.

At Knox Tax, we’ll soon help you turn your log into an easy formula that we’ll then apply across the whole Tax Income Year for you.

Can I claim my purchase price for my smart phone, tablet, or similar electronic devices, if I use it/them for work?

You certainly can.  In this type of instance, you’ll need to apportion the percentage of time you actually use these devices for work.  Again, keep good records over a four week period, and bring them to us with your purchase receipts and phone/internet accounts.

(The above article has been formed using information provided by the ATO Website, 20th August, 2015)

And so, just when you thought you had all of your record keeping streamlined and organised, here’s something else to squeeze into your spreadsheet.  But remember, in the words of Blondie, you can always “Call Me!”, or CALL US here at Knox Taxation and Business Advisory.  And don’t forget to make a quick note in your diary that you did.

You’ll get all the help you need to get those new systems in place.

With Knox Tax, you’re always in good hands.

Coral Page
Principal

 

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