Using Phone for Work: What Can I Claim for Tax?

Mobile phones have become an important part of daily life – and they've become a crucial tool for communicating by video, voice and text message both in our personal lives and in our work. With more people working from home or in remote offices than ever before, phones have become even more indispensable.

The good news is: If you use your mobile phone for work, then you're entitled to claim it as a tax deduction when you do your annual return. But there are some conditions you need to know about.

In a nutshell, to claim a deduction for your phone you must:

• Have paid personally for the phone or service you're claiming
• Ensure the expense is directly related to earning your income
• Have a record (such as a receipt or bill) to prove it
• Not have claimed the ATO’s 67 cents per hour fixed rate for working from home

What phone usage counts for deductions?  

You can use your mobile phone in a wide range of work-related activities for it to be eligible for a deduction, including:

• Communicating with colleague via calls or messages
• To receive and make  calls to client
• Sending and receiving emails
• Taking photos
• Managing social media
• Downloading presentations
• Joining conference calls

How do I claim my phone usage as a tax deduction?  

Even if you only used your phone for work a small percentage of the time, you're still eligible to claim this portion of usage as a deduction in your tax return.There are various ways to calculate this usage. If you only use your phone incidentally and the total you're claiming comes to less than $50, you don't have to analyse your bills and can just claim the following:

• $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

Or if you have a phone bill with itemised usage, you can use this to work out the deductible amount. For example, if your phone bill is $60/month and you estimate your work usage to be $25% and the time you spend working over the year is 11 months (minus annual leave) then your deductible amount would be ($60 x 0.25 x 11) = $165.

If your phone bill isn't itemised, you need to keep records of all calls during a one month period and use this to determine the percentage of phone usage that is related to work. This means keeping a record of:

• Estimated number of calls related to work as percentage of total calls
• Estimated time spent on calls for work over total call time
• Estimated data used for work related phone activity over total data usage

If you have a mobile/internet bundle for your home, and the internet service is used by other members of your household, then you need to work out an estimated usage amount for a month that takes into account other people, and multiply this out for the year.

When working this out for home internet usage, you should consider:

• 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.

For home phone usage, you should consider:  

• 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.

What tax deductions can't I claim when it comes to phone usage?  

Remember that you can only claim phone usage when you have paid for it yourself outright, so any bills or expenses currently covered by your employer are not eligible for deductions.

You can’t claim for use of your mobile phone if you also claim the 67 cents/hour fixed rate for working from home. This rate includes an element for mobile phone use, which prevents a separate deduction for mobile phone use.

It's important to be careful when calculating possible deductions for mobile phone and internet usage, and to have the documentation to back you up, because over-claiming can result in having to pay back excessive claims and even possible penalties.

Still have some questions about deducting your phone usage? Talk to H&R Block. Our experienced tax consultants will be able to help. Call 13 23 25 for details or find your nearest office and book an appointment online.