Phone, internet and home phone expense claims

The ATO has issued an information sheet setting out new requirements for taxpayers claiming phone and internet expenses.

Where taxpayers use their own phone or internet for work purposes and paid these costs themselves, they may be able to claim a deduction for the cost, providing they have the necessary records to substantiate those claims.

Starting from next year (2016), all taxpayers making a claim for phone and internet expenses will need to keep a 4 week diary every year.

In order to make a claim that is more than $50, the diary will include:

  • Dairy entries – including electronic records
  • Bills; and preferably
  • Evidence that their employer expects them to work at home or to make work related calls from their own phones.

If a taxpayer is making a claim of less that $50 they may claim on the following basis:

  • $0.25 for work calls from a land line;
  • $0.75 for work calls from a mobile; and
  • $0.10 for a text message sent from a mobile.

Taxpayers who receive and itemised bill will need to determine their work related calls over a 4 week period on a reasonable basis and then apply that percentage for the full year.  A reasonable basis includes:

  • The number of work related calls as a percentage of total calls
  • Amount of time spent on work related calls as a percentage of total calls;
  • Amount of data downloaded for work purposes as a percentage of total downloads.

Where taxpayers do not have an itemised bill they should keep a record of all their calls over a 4 week period and they apply the reasons basis to their claim.

Where phone and internet have been bundled and taxpayers wish to make a claim for one or more of these services they need to apportion their costs based on the usage of each service.  Taxpayers will need to identify their work related usage over a 4 week period for each service and they apply the reasonable basis to calculate their claim.

Reasonable basis can include:

Internet

  • Amount of data downloaded for work purposes as a percentage of total downloads.
  • Additional costs incurred where work usage results in exceeding monthly cap.

Phone

  • The number of work related calls as a percentage of total calls
  • Amount of time spent on work related calls as a percentage of total calls;
  • Additional costs incurred where work usage results in exceeding monthly cap.

Example

Taxpayer monthly home phone and internet bundle cost $100 comprising $40 phone and $60 internet and a mobile plan of $80.  Based on taxpayers 4 week diary 20% of mobile usage and 10% of internet usage relates to work while the home phone was not used for work.   Taxpayer could make a claim of:

Internet               10% x $60 x 11 months (allowing 1 month leave)                =$66

Mobile                  20% x $80 x 11 months                                                                  =$176

Total claim                                                                                                                           =$242