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Mobile phone tax deductions

Mobile phone bills are tax deductible when they are related to earning your taxable income. However, there are rules around how to get these into your tax return. Read on and work out the best way for you.  

If you use your personal mobile phone for work purposes, you may be able to claim a mobile phone tax deduction for your phone bills.

There are certain rules and guidelines that you need to follow to ensure that your mobile phone tax deduction claims are valid. In this blog, we’ll cover everything you need to know about claiming your phone as a tax deduction.

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, and if you’re on a plan, you can only claim the portion of the bill that relates to work-related calls and data usage. It is important to know this when completing your online tax return, or tax filing.

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

Screenshot 2023-05-07 at 9.01.12 am.pngWe’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.

Entering your tax deduction in your tax return

To ensure you get the increase in tax refund you deserve from your mobile tax deduction, you now need to get this into your tax return. Best way is to write in there the method you used. For example you might write $125 x 12 x $75 using logbook. Then you enter in the $1,125 mobile tax deduction in the box for entering numbers and then you’re done! Simple as that and then you’ll always be able to easily recall how you calculated the amount. Then, just retain your logbook and mobile phone bills for 7 years just in case the ATO come knocking.

No need to be worried about the ATO however when you file your tax return through an online tax agent. They will always contact your online 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 an online tax agent.

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.

One Click Life can help with your tax return!

One Click Life makes it simple to track and organise all your life’s admin in one place. Operated by finance and tax professionals, One Click Life allows you to complete your online tax return fast from your mobile phone.

Dealing with an online tax agent is the easiest way to complete your tax return. You just log in and click on the year. You can also claim your online tax agent fees as a tax deduction – increasing your refund and getting the help you need for an easy tax return. One Click Life can also help with your Mortgage, Will, and Health Insurance, so you can spend more time on things that matter while saving money!