What expenses can I claim?

The ATO has issued guidance on claiming mobile phone, internet and home phone expenses.

It says that if you use any of these for work purposes, you may be able to claim a deduction if there are records to support your claims. But the ATO points out that use for both work and private use will require you working out the percentage that “reasonably relates” to your work use.

Substantiating claims
The ATO requires that you keep records for a four-week representative period in each income year to claim a deduction of more than $50. These records can include diary entries, including electronic records, and bills. “Evidence that your employer expects you to work at home or make some work-related calls will also help you demonstrate that you are entitled to a deduction,” it says.

When you can’t claim a deduction for your phone
Of course if your employer provides you with a phone for work use and also pays for usage (phone calls, text messages, data) then you are not able to claim a deduction. Similarly, if you pay for usage but are subsequently reimbursed by your employer, you are not able to claim a deduction.

How to apportion work use of your phone
As there are many different types of plans available, you will need to determine your work use using a reasonable basis.

Incidental use

If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyse your bills:

$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.

Usage is itemised on your bills
If you have a phone plan where you receive an itemised bill, you need to determine your percentage of work use over a four-week representative period, which can then be applied to the full year.

You need to work out the percentage using a reasonable basis. This could include:

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.

Usage is not itemised on your bills
If you have a phone plan where you don’t receive an itemised bill, you can determine your work use by keeping a record of all your calls over a four-week representative period and then calculate your claim using a reasonable basis.

The ATO uses an example to further explain this.

Ahmed has a prepaid mobile phone plan that costs him $50 a month. He does not receive a monthly bill so he keeps a record of his calls for a four-week representative period. During this four-week period Ahmed makes 25 work calls and 75 private calls. He worked for 11 months during the income year, having had one month of leave. He therefore calculates his work use as 25% (25 work calls out of 100 total calls). He claims a deduction of $138 in his tax return (25% x $50 x 11 months).
Bundled phone and internet plans
Nowadays phone and internet services are often bundled together. The ATO says that when you are claiming deductions for work-related use of one or more services, you need to apportion your costs based on your work use for each service. “If other members in your household also use the services, you need to take into account their use in your calculation.”

If you have a bundled plan, you need to identify your work use for each service over a four-week representative period during the income year. This will allow you to determine your pattern of work use, which can then be applied to the full year.

A reasonable basis to work out your work related use could include:
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.

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.

Again, the ATO uses a worked example to illustrate.

Des has a $90 per month home phone and internet bundle, and unlimited internet use as part of his plan. There is no clear breakdown for the cost of each service. By keeping a record of the calls he makes over a four-week representative period, Des determines that 25% of his calls are for work purposes. Des also keeps a record for four weeks of the data downloaded and determines that 30% of the total amount used was for work.
He worked for 11 months during the income year, having had one month of leave.
As there is no clear breakdown of the cost of each service, it is reasonable for Des to allocate 50% of the total cost to each service.
Step 1 – work out the value of each bundled component
Internet: $45 per month ($90/2 services).
Home phone: $45 per month ($90/2 services).
Step 2 – apportion your work related use
Home phone: 25% work related use x $45 per month x 11 months = $124.
Internet: 30% work related use x $45 per month x 11 months = $149.
In his tax return Des claims a deduction of $273 ($124 + $149) for the year.