CLAIMING MOBILE PHONE, INTERNET & HOME PHONE EXPENSES

If you use your own phone or internet for work purposes, you may be able to claim a deduction if all of the following conditions apply:

  • you spent the money yourself
  • the expense is directly related to earning your income
  • you must have a record to prove it.

You can’t claim a deduction where you haven’t incurred any expenses, or you’re reimbursed for any costs by your employer.

If you use your phone or internet for both work and private use, you will need to work out the percentage that reasonably relates to your work use.

Substantiating your claims

To claim a deduction of more than $50, you need to keep records for a four-week representative period in each income year. These records may include diary entries, including electronic records, and bills. Evidence that your employer expects you to work at home or make some work-related calls from home will also help you show that you are entitled to a deduction.

When you can’t claim a deduction for your phone

Employer provided phone

If your employer provides you with a phone for work use and they are billed for the usage (phone calls, text messages, data) then you can’t claim a deduction. Similarly, if you pay for your usage and are then reimbursed by your employer, you can’t claim a deduction.

Costs you incur before work commences

If you use your phone to seek employment you can’t claim a deduction as you are not yet generating income from the use of the phone.

Similarly, if you are a casual employee and an employer calls you to ask you to work, or you call them to check on work availability, you can’t claim a deduction. The cost is not considered to be one that directly relates to your income producing activities. Instead, it’s an activity that is putting you in a position to earn that income.

You can only claim a deduction for the portion of your phone use when you’re earning assessable income and your employer requires you to use your phone directly in earning that income.

Purchasing a smartphone, tablet or other electronic device

If you bought a smartphone, tablet or other electronic device and you use it for work you can claim a deduction for a percentage of its cost.

How to apportion work use of your phone

  1. Incidental use
  2. Usage is itemised on your bills
  3. Usage is not itemised on your bills
  4. Bundled phone and internet plans

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

  1. 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.

 

  1. Usage is itemised on your bills

If you have a phone plan with an itemised bill, you need to work out your percentage of work use over a four-week representative period, which you can then apply 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
  • amount of time spent on work calls as a percentage of your total calls
  • amount of data downloaded for work purposes as a percentage of your total downloads.

Example: Phone calls are itemised on your bill

Julie has an $80 per month mobile phone plan, which includes $500 worth of calls and 1.5GB of data. She receives a bill that itemises her phone calls and provides her with her monthly data use.

Over a four-week representative period, Julie identifies that 20% of her calls are work-related. She worked for 11 months during the income year, having had one month of leave. Julie can claim a deduction of $176 in her tax return (20% × $80 × 11 months).

  1. Usage is not itemised on your bills

If you have a phone plan where you don’t receive an itemised bill, you 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.

Example: Non-itemised account

Ahmed has a prepaid mobile phone plan that costs him $50 per month. Ahmed 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. Ahmed worked for 11 months during the income year, having had one month of leave.

Ahmed calculates his work use as 25% (25 work calls ÷ 100 total calls). He claims a deduction of $138 in his tax return (25% × $50 × 11 months).

  1. Bundled phone and internet plans

Phone and internet services are often bundled. If 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 you can then apply 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.

 

Example: Apportioning bundled services

Sujita has a $100 per month home phone and internet bundle. The bill identifies that the monthly cost of Sujita’s phone service in her bundle is $40, and her internet service is $60. Sujita brings in her mobile phone plan of $90 per month and receives a $10 per month discount. Her total costs for all services are $180 per month.

Sujita worked for 11 months during the income year, having had one month of leave.

Based on her itemised accounts, Sujita determines that the work-related use of her mobile phone is 20%. Sujita also uses her home internet for work purposes and based on her use she determines that 10% of her use is for work. Sujita does not use her home phone for work calls.

As the components are part of a bundle Sujita can calculate her work-related use as follows:

Step 1 – work out the value of each bundled component

  • Mobile phone: $90 per month minus the $10 per month discount = $80 per month
  • Internet: $60 per month
  • Home phone: Sujita does not need to determine the home phone costs as she does not use this service for work purposes.

Step 2 – apportion work-related use

  • Mobile phone use: 20% work-related use × $80 per month × 11 months = $176
  • Home internet use: 10% work-related use × $60 per month × 11 months = $66
  • In her tax return, Sujita claims a deduction of $242 for the financial year ($176 mobile phone use + $66 home internet use).

Example: Apportioning bundled services

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.

Des 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 (calls and downloads), it is reasonable for Des to allocate 50% of the total monthly cost to each service.

Step 1 – work out the value of each bundled component

  • Internet: $45 per month ($90 ÷ two services)
  • Home phone: $45 per month ($90 ÷ two services)

Step 2 – apportion work-related use

  • Internet: 30% work-related use × $45 per month × 11 months = $149
  • Home phone: 25% work related use × $45 per month × 11 months = $124
  • In his tax return, Des claims a deduction of $273 ($149 + $124) for the year.

 

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

COVID-19 Early Release Of Super

If you have been financially affected by COVID-19, you may be able to access some of your superannuation early. Eligible citizens and permanent residents of Australia or New Zealand can both:

  • apply for up to $10,000 in 2019–20
  • apply again for up to a further $10,000 in 2020–21.

Eligible temporary residents can apply once to access up to $10,000 of super in 2019–20. Temporary residents cannot apply after 30 June 2020.

Applications can be submitted online through myGov:

  • until 30 June 2020 for the 2019–20 year
  • between 1 July 2020 and 24 September 2020, for the 2020–21 year.

You will not need to pay tax on amounts released under COVID-19 early release of super and will not need to include these amounts in your tax return – amounts released under other compassionate grounds must be included

Eligibility

  1. Citizens and permanent residents of Australia and New Zealand

To be eligible, a citizen or permanent resident of Australia and New Zealand

A confirmed coronavirus patient is wheeled to a hospital at Chuncheon, South Korea, February 22, 2020. Yonhap via REUTERS

must require the COVID-19 early release of super to assist them to deal with the adverse economic effects of COVID-19.

In addition, one of the following circumstances must apply:

  • you are unemployed
  • you are eligible to receive one of the following:
    • jobseeker payment
    • youth allowance for jobseekers (unless you are undertaking full-time study or are a new apprentice)
    • parenting payment (which includes the single and partnered payments)
    • special benefit
    • farm household allowance

 

  • on or after 1 January 2020 either:
    • you were made redundant
    • your working hours were reduced by 20% or more (including to zero)
    • you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).

 

  1. Temporary residents

Temporary residents can only apply for a COVID-19 early release of super in 2019-20. Applications close on 30 June 2020. To be eligible, temporary residents must require the COVID-19 early release of super to assist them to deal with the adverse economic effects of COVID-19.

In addition, they must be in one of the following circumstances:

  • You hold a student visa that you have held for 12 months or more and you are unable to meet immediate living expenses.
  • You are a temporary skilled work visa holder and still employed but unable to meet immediate living expenses.
  • You are a temporary resident visa holder (excluding student or skilled worker visas) and you cannot meet immediate living expenses.

Temporary residents cannot be eligible for COVID-19 early release of super and the Departing Australia Super Payment (DASP) at the same time. COVID-19 early release of super eligibility requires temporary residents to be on a current valid visa; DASP is only available once their visa has expired and they have left Australia.

Assessing your eligibility

You do not need to attach evidence to support your application. However, you should keep records and documents to confirm your eligibility as we may ask you for this information. You can only submit one application for COVID-19 early release of super per financial year (temporary residents can only apply until 30 June 2020).

If you’re eligible and you want to access COVID-19 early release of super in the 2020-21 financial year, you need to apply in that financial year -between 1 July and 24 September- even if you have applied in 2019-20. Applications cannot be submitted after 24 September 2020.

You can apply for COVID-19 early release of super even if you have previously accessed your super early in other circumstances.

You can’t access your super early for a dependant. If your dependant is financially affected by COVD-19, they must apply themselves.

Eligibility examples

Example

Edward’s employer temporarily closes her shop in late March 2020 following a downturn in trade due to COVID-19. Edward is stood down and applies for and receives $8,000 of his superannuation under COVID-19 early release of super in May 2020. By mid-June shops have reopened and Edward recommences work. When we contact Edward, he uses his payslips to show his work hours decreased by at least 20% from March to May. Edward’s eligibility is confirmed, and no further action is taken.

Example

Audrey runs her own business as a sole trader in the fitness industry. Due to COVID-19, Audrey has a lot less work and she decides to temporarily shut down her business. Due to the financial impact, Audrey decides to apply for $7,000 from her super to help with immediate living expenses. When we contact Audrey to confirm her eligibility, she provides a link to her website and business bank records to show that her business had temporarily been suspended. Audrey is eligible for COVID-19 early release of super because her business temporarily ceased operating and she suffered a financial impact due to COVID-19.

Implications of accessing your super early

Accessing your super early will affect your super balance and may affect your future retirement income.

Withdrawing superannuation may also affect your:

  • income protection insurance
  • life and total permanent disability insurance cover

Insurance may not be available on accounts that have a low balance.

You should consider whether you need to seek financial advice before submitting your application for early release of super.

Before you apply

Before you start the application process, you should:

  • set up your myGov account and link it to the ATO
  • have your Australian bank account information available; you will need this to complete your application. Only Australian bank accounts are accepted
  • check your super balance; your actual account balance may be higher or lower than that shown in ATO online or in the early release application form.

There are several ways you can check your super balance:

Check your total superannuation balance in ATO online services. There will be an ‘as at’ or ‘effective’ date for the balance. In most cases, it will be 30 June 2019 as funds are only required to report to us once a year. This means your account balance may have changed since it was last reported to us; it may be higher or lower than shown on ATO online or in the early release application form.

If you have access to your super fund’s online member portal, you can log on and check your current account balance there. It might be a good time to establish a login to your fund portal if you haven’t already.

Check the last statement that your fund issued to you. This might be by paper or email.

Call your fund but understand that they have had a large increase in members calling and there could be delays in having your call answered.

If your fund is a state-administered fund, or you’re a member of an exempt public sector super scheme (EPSSS), you will need to confirm whether they are allowed to release super due to COVID-19, before you submit an application.

Submit an application

Applications for early release of superannuation are accepted through ATO online services via myGov.

You can only submit one application for COVID-19 early release of super in each financial year:

  • 2019–20, between 20 April and 30 June 2020
  • 2020–21, between 1 July and 24 September 2020 (Australian and New Zealand citizens and permanent residents only).

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

INSTANT ASSET WRITE-OFF FOR ELIGIBLE BUSINESSES

Under the instant asset write-off, eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used, or installed ready for use.

Instant asset write-off can be used for:

  • multiple assets as long as the cost of each individual asset is less than the relevant threshold
  • new and second-hand assets.

It cannot be used for assets that are excluded from the simplified depreciation rules.

The instant asset write-off eligibility criteria and threshold have changed over time. You need to check your business’s eligibility and apply the correct threshold amount. This depends on when the asset was purchased, first used or installed ready for use.

Recent changes

From 12 March 2020 until 31 December 2020 the instant asset write-off:

  • threshold amount for each asset is $150,000 (up from $30,000)
  • eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

Eligibility

Eligibility to use instant asset write-off on an asset depends on:

  • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • the date you purchased the asset
  • when it was first used or installed ready for use
  • the cost of the asset being less than the threshold.

If you run a small business and choose to use the simplified depreciation rules, you must use instant asset write-off on all eligible assets.

Businesses with an aggregated turnover of $500 million or more are not eligible to use instant asset write-off.

From 1 January 2021 the instant asset write-off will only be available for small businesses with an aggregated turnover of less than $10 million and the threshold will be $1,000.

Instant asset write-off thresholds

 

Eligible businesses Date range for when asset first used or installed ready for use Threshold
Less than $500 million aggregated turnover 12 March 2020 to 31 December 2020 (see note) $150,000
Less than $50 million aggregated turnover 7.30pm (AEDT) on 2 April 2019 to 11 March 2020 $30,000

Note: For eligible businesses with an aggregated turnover from $10 million to less than $500 million, the $150,000 threshold applies for assets purchased from 7.30pm (AEDT) on 2 April 2019 but not first used or installed ready for use until 12 March 2020 to 31 December 2020.

Excluded assets

You must use the general depreciation rules for the following depreciating assets – as they are specifically excluded from the simplified depreciation rules:

Car limit

A car limit applies to the cost of passenger vehicles (except a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than nine passengers. The one tonne capacity relates to the maximum load your vehicle can carry, also known as the payload capacity.

The payload capacity is the gross vehicle mass (GVM) as specified on the compliance plate by the manufacturer, reduced by the basic kerb weight of the vehicle.

The basic kerb weight is the weight of the vehicle with a full tank of fuel, oil and coolant together with spare wheel, tools (including jack) and factory-installed options. It does not include the weight of passengers, goods or accessories.

  • Payload capacity = GVM – basic kerb weight

The car limit is:

  • $57,581 for the 2019–20 income tax year
  • $59,136 for the 2020–21 income year.

The instant asset write-off is limited to the business portion of the car limit for the relevant income tax year. For example, the car limit is $57,581 for the 2019–20 income tax year. If you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186.

You cannot claim the excess cost over the car limit under any other depreciation rules.

If your vehicle is not considered a passenger vehicle, the car limit does not apply. You can claim the cost of the vehicle if it is less than the relevant threshold amount.

Cost of asset exceeds threshold

If you are a small business using the simplified depreciation rules, and the cost of the asset is the same as or more than the relevant instant asset write-off threshold, the asset must be placed into the small business pool.

If you are not using the simplified depreciation rules, you may be able to use the general depreciation rules or use the backing business investment – accelerated depreciation for certain qualifying assets.

Work out your deduction

The entire cost of the asset must be less than the relevant threshold, not including any trade-in amount. Whether the threshold is GST exclusive or inclusive depends on if you’re registered for GST.

To work out the amount you can claim, you must subtract any private use portion. The balance (that is the portion you use to earn assessable income) is generally the taxable purpose portion (business purpose portion). While you can only claim the taxable purpose portion as a deduction, the entire cost of the asset must be less than the relevant threshold.

This also applies to research & development (R&D) use. When you work out the amount you can include in the calculation of your R&D tax offset for your R&D use, you must subtract any non-R&D use including the taxable purpose portion and private use portion.

Later sale or disposal of asset

If you use the instant asset write-off for an asset and then sell or dispose of that asset, you need to include the taxable purpose portion of the amount you received for the asset in your assessable income for that year.

If you use the instant asset write-off for an asset that is later destroyed (for example, in a bushfire or flood) then the amount you receive (such as from an insurance payout) for the destruction of the asset is included in your assessable income.

 Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.