If you use you use you mobile phone, home phone or internet for work purposes you may be able to claim a deduction. To be eligible you must not be reimbursed for these expenses and must be able to support your claim. The private portion of your usage is not eligible to be deducted and as such your deduction must be apportioned accordingly.
It may become an arduous task for individuals to calculate the business use or percentage for each of the services they wish to claim for. There are two ways to calculate the business use percentage of each respective service. The first option is keep a 4 week diary that demonstrates the Business use Percentage (BUP). Alternatively, you may calculate by viewing an itemised breakdown of the respective expenses and determining BUP either by comparing the number of calls made or data used or call length to the respective totals.
Telecommunication companies often package home phone, mobile phone and internet services together. This causes an issue for individuals who wish to claim a work related deduction as they must apportion the costs for each component. This requires either obtaining an itemised break down of the costs of each service or calculating as a percentage the relevant service costs as if they were purchased separately from your supplier or similar supplier.
Presently, the Australian Taxation Office (ATO) allows for the use of safe harbour rates for home phone and mobile phone use. The Safe harbour rates allow you to avoid the task of recording a 4 week diary or going through your itemised bill. The ATO provides a separate rate for each phone call from a land line and mobile phone and text message. While you are not required to calculate business use percentage using the Safe Harbour rates you are still required to be able demonstrate how you calculated the expense and that the expense actually incurred. The drawback of using this method as it only allows a maximum deduction of $50.
If you are having difficulties calculating your work related expense for your home phone, mobile phone or internet please contact us at the Quinn Group on (02) 9223 9166 or submit an online enquiry. Our team of tax accountants and lawyers will be able to assist you in legally minimising your tax liability.