The Australian Tax Office (“ATO”) has recently released a Practice Statement (PS LA 2001/6) which outlines the evidence required to be kept in order to claim mobile phone, internet, home phone, and other electronic device expenses.

The changes increase the substantiation requirements for any deductions exceeding $50 and broadly suggest that a four week diary is recorded to substantiate any claim made.

We provide more detail regarding each specific deduction below:

Phone Expenses

If your work-related telephone use is incidental and does not exceed the $50 threshold in total, you can use the following to analyse your bills:

• $0.25 for work calls made from taxpayer’s landline
• $0.75 for work calls made from taxpayer’s mobile, and
• $0.10 for text messages sent from taxpayer’s mobile.

If you would like to claim a deduction of more than $50 and you receive itemised bills, you should determine your work-use percentage over a four week period. This proportion is then applied to the full year accordingly. There are many ways this can be done, including:

– Number of work call as a percentage of total calls;

– Time spent on work calls as a percentage of total calls; or

– Amount of data downloaded as a percentage of total data downloaded.

However if your bills are not itemised, you will be required under the guidance of the new Practice Statement to keep a four week diary which records all work-related and private calls. This can be analysed and the percentage of work-related calls analysed and apportioned appropriately.

Bundled Phone and Internet Expenses

The Practice Statement suggests that for bundled plans the following process is followed:

1. Apportion the total cost of the bundled service appropriately between phone use and internet use; any other household users should be taken into account in this calculation;
2. Record a four week diary during a representative period to record phone and internet work-use;
3. Use the proportions calculated (2) to be applied against each specific service calculated in (1).

Home Office

You can claim a deduction for home office ‘running expenses’ via:

• a deduction for a claimed proportion of actual expenses incurred; or
• a deduction calculated at the rate of 45 cents per hour (effective from 1 July 2014).

If you would like any more information regarding any of the points raised, or a diary template to record your work-related phone and internet use, please contact us.