With the growing reliance on digital communication, many employees and business operators wonder if they can claim their internet and phone expenses as work-related tax deductions. The Australian Taxation Office (ATO) allows eligible taxpayers to claim a deduction for these expenses, but there are specific rules and record-keeping requirements to follow. This comprehensive guide explains when and how you can claim phone and internet costs, what portion is deductible, and how to keep the necessary evidence to support your claim.
When Can You Claim Phone and Internet Expenses?
You can claim a deduction for the work-related portion of your phone and internet expenses if you incur these costs as part of earning your income. This applies to:
- Employees who use their personal phone or internet for work purposes
- Freelancers, sole traders, and contractors who use these services for their business
- Casual, part-time, or full-time workers who work from home and require internet and phone access
What Expenses Are Claimable?
The expenses you may claim include:
- Monthly or quarterly phone and internet bills
- Connection fees or installation costs (claimed over several years)
- Mobile phone call costs related to work
- Data usage charges for work activities
- Costs of equipment like modems or routers (depreciated over time)
However, you cannot claim the cost of the entire bill if you also use the services for private purposes.
How to Calculate the Work-Related Portion
Since most people use their phone and internet for both work and private activities, you can only claim the part related to work. The ATO recognises several methods to calculate this:
1. Logbook or Diary Method
Keep a detailed diary or logbook for a representative 4-week period to record your work-related phone calls and internet usage. Calculate the percentage of work use during this time, then apply this percentage to your total expenses.
2. Actual Use Method
If you know the exact work-related amounts from your phone or internet provider, you can claim these specific amounts.
3. Fixed Rate Method
The ATO allows a fixed-rate claim for mobile phones, which covers calls and text messages but excludes the cost of phone purchase or internet usage.
Record Keeping Requirements
To substantiate your claim, you need to keep:
- Receipts or bills for your phone and internet expenses
- A diary or log of work-related usage if claiming a portion of the expenses
- Details of any reimbursements or payments received from your employer for these costs
The ATO requires you to keep records for at least five years.
Employer Reimbursements and Claims
If your employer reimburses you for phone or internet expenses, you cannot claim a deduction for those amounts. Any reimbursed amounts should be excluded from your claim.
Some employers provide a mobile phone or cover internet costs directly, which means you cannot claim those expenses yourself.
Common Mistakes to Avoid
- Claiming the full cost without apportioning private use
- Failing to keep adequate records or logs
- Claiming costs reimbursed by the employer
- Claiming expenses that relate to other household members
How to Claim Internet and Phone Expenses
When completing your tax return, include your work-related phone and internet expenses under the work-related expenses section. Use your calculated percentage or actual amounts to claim a fair deduction.
If you use accounting software or a tax agent, ensure these expenses are correctly recorded and supported by documentation.
Conclusion
Claiming internet and phone expenses for work can help reduce your taxable income, but it requires careful calculation and record-keeping. By understanding the ATO’s guidelines, maintaining accurate logs, and only claiming the work-related portion, you can confidently include these deductions in your tax return while staying compliant. Always keep supporting evidence and consider professional advice if you have complex circumstances or multiple claims.
