Technology has played a crucial role in the exchange of communication and gain of information since the invention of the mobile phone, more importantly the smartphone. The smartphone has since earned the position of an almost permanent attachment to the body, much like a limb. It is now seen as a phone, camera, computer, calculator, diary, alarm, radio. If you can think of it, your average smartphone generally has the feature. As your smartphone can now improve the productivity of your everyday life, it is now recognised as a working tool and therefore, potential tax deduction. Let’s take a closer look into how you can turn your work-related phone calls and phone use into a deduction.
Authenticating your claims
Claiming work-related calls as a tax deduction on your personal mobile is possible, although, it is important that it is done legitimately and appropriately to avoid being penalised by the ATO. Remember, you cannot claim any work-related calls from a work mobile phone, only your personal mobile.
Records for a four-week representative period in each income year need to be kept to claim a deduction of $50 or greater. Records can include things like electronic records, phone bills and diary entries. This four week period can be seen as an indicative period and therefore applied to the whole year.
How to work out your work-use phone calls
On an itemised bill, you can work out your apportion of work related calls by doing the following:
- Count the total number of calls made
- Count how many of those calls were work-related
- Divide the number of work-related calls by number of total number of calls and then multiply by 100 to work out the percentage of work-related calls
- Calculate the percentage of work-related calls in monetary terms against your monthly bill
- Multiply cost by 12 months to work out annual claim
EXAMPLE: Bob has a $90/month phone plan and on his bill, it outlines he made 120 calls in total. 72 of those calls were work-related (72/120 = 60%), this means 60% of the total cost of the bill can be claimed. (60% x $90/month x 12months = $648 annual claim).
On a non-itemised bill, you will need to keep personal or diary entry records to work out your own percentage of calls made.
EXAMPLE: Susie has a prepaid mobile phone plan which costs $40 a month. Out of a four week indicative period, Susie counted 100 calls made in total. 75 of those calls being work-related. This equates to 75% of mobile phone use being for work purposes. Susie calculates her total claim by the following equation. (75% x $40/month x 12 months = $360)
If you would like to know any further information regarding tax deductions, Contact our friendly team at Tax Return today!