Understanding Tax Deductions for Mobile Phone & Upcoming Plan Signing for WFH

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  life is suffering on 16/03/2022 - 23:37

  Yes you can

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  fredblogs on 16/03/2022 - 23:40

  +1

  Yes you can. But also check if you can salary sacrifice the phone, works out better.

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  saitaris on 16/03/2022 - 23:44

  +4

  Not an accountant, not tax advice, but…

  1) Regarding claiming internet usage, your ability to do this will also depend on whether you use the ATO shortcut method for WFH (if that's still around this financial year?) i.e you cannot claim the 80c per hour plus internet costs, it is included in the 80c per hour. You may also struggle to truly justify an 80/20 work/personal split for internet if you were ever audited. Does a spouse/partner ever use it? Kids?

  2) I do not believe you could depreciate the iPhone RRP (I assume this is the $1349 you refer to; you don't state an exact model) as you have not paid RRP for it. You can only claim/deduct based on actual costs incurred. Vodafone gave you $1000 off, so actually all you can depreciate is $349 over the useful life of the phone. Unfortunately it will cost you $49 too much to qualify as an instant claim for $300 or less. You can then claim the proportion of your phone plan that is used for work; again, the ATO shortcut method possibly invalidates this too.

  If your employer offers a salary sacrifice arrangement for the purchase of a phone it can be a decent way to go about it, you will essentially save your marginal tax rate + GST on the purchase (so a lot if you are a high income earner) and you get this benefit in a single financial year. It will cost more than $349 for an iPhone 13, but you won't be locked in to a 24 month plan at $69pm and can shop around for a cheaper deal. $69 is a lot to spend on a phone plan especially with Vodafone, IMO.

  • 

    OzCheapo on 17/03/2022 - 22:58

    Good question, no, didn't account for internet over the weekend but have a part time research position that requires internet, and that I journal use in. No spouse and kids… can't afford it after bulk buying a crate of Eneloops.

    Mate and I were in a heated discussion on whether it's proportionate to usage vs instant deduction. Based on my understanding of the ATO website, how OzBargain community has come suggested, he's either pissed drunk or doesn't know what he's talking about. But I'll look into salary sacrifice. Was thinking either $69pm or go Felix… which is cheaper but means iPhone will cost retail and then depreciation every tax year.

    • 

      saitaris on 18/03/2022 - 13:28

      If you are deducting a phone that is shared between work and personal this is proportionate to usage I believe (not an accountant.) In the example you gave of getting an iPhone 13 for $349 you will likely see peanuts back from the ATO on this - even if you try and claim a high split like 80:20, you will be depreciating this over the phone's useful life (2-3 years, whatever ATO say). You will be able to claim the proportion of your phone plan as well though, but again in an audit situation you would likely need to justify how you arrived at these figures. Eg, you may make the majority of your calls for work, but does work need (for example) 100GB of mobile data or is all of that getting used for personal use?

      Salary sac is the best way if your employer offers it and if your tax rate is high enough. You really want to be in at least the 37% marginal tax bracket (+ML) to get some decent savings out of it. If you're in a low marginal tax bracket it isn't worthwhile. The other advantage of salary sacrifice is that the device simply needs to be "primarily" for work purposes and not solely for work, but it is not pro-rated proportionately to the work related component.

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  rektrading on 17/03/2022 - 02:44

  -3

  Buy a $50 smartphone + sim outright for personal use and an iPhone 13 for WFH. Claim a 100% deduction on the iPhone 13.

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  SF3 on 17/03/2022 - 09:03

  Do check with your tax accountant?

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  redfox1200 on 17/03/2022 - 09:24

  +1

  will you accept any non work phone calls within those work hours?

  • 

    OzCheapo on 17/03/2022 - 22:58

    That is a good question… No. Its mainly clients and I checking in.

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  freefall101 on 17/03/2022 - 11:01

  +1

  Lot of questions, thus why talk to an accountant.

  Are you being reimbursed at all for any of this? Are you tethering via your phone thus the all day internet usage and not using any other internet source? Do you not use your phone during 5-7pm or after 9pm or on weekends? 80% seems very high. Do you ever go into the office or is it 100% WFH? Do you claim the shortcut method on expenses?

  Also, as above, you can't claim $1,349 if that's the price before the $1k discount. You can claim $349.

  That's not an exhaustive list of questions, so either talk to an accountant or do your research on ato.gov.au.

  • 

    OzCheapo on 17/03/2022 - 22:59

    I read the ATO site a while ago, and my understanding was above. Wanted to check whether my thinking was right or I had it wrong all along, including when I did my taxes last year.