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  • myGovID – claiming deductions for phone and internet expenses

    If you incur expenses associated with setting up and using myGovID to access our online services in the course of running your business, you may be able to claim tax deductions for the business portion of those expenses.

    Find out about:

    Expenses you can claim as deductions

    There are two types of expenses you can claim as deductions:

    • capital expenses, including the full cost or the decline in value of a mobile device (smartphone or tablet)
    • operating expenses, including internet service fees, data and mobile phone call expenses, allowances and reimbursements paid to employees who use their own mobile device for work purposes.

    If you’re an eligible business for the instant asset write-off, the full cost of the mobile device you purchase will be deductible if it is less than the instant asset write-off threshold.

    You can only claim the business portion of the expenses if the mobile devices are used for both business and private uses.

    If you are registered for GST, you can claim a credit for any GST included in the price of a mobile device or data purchased for use in your business. If you claim a credit for the GST, you must reduce the amount you claim as a deduction for the mobile device or data, by the amount of the GST credit for which you are entitled to claim.

    Example 1 – small business owner purchases mobile device

    Angus is a sole trader and operates a landscaping business. Angus's business is a small business. He isn't required to be registered for GST and he is eligible to use the instant asset write-off.

    During 2019–20, Angus purchases a tablet, keyboard and stylus for business use. The total cost is $1,200. Angus also enters into a contract for a mobile data plan for the device, which costs $75 a month. Angus uses the device to draw plans, produce quotes and invoices, send and receive emails, do all of his bookkeeping and manages his tax obligations.

    From 1 March 2020, Angus also uses the device to set up a myGovID to access the Business Portal. Angus doesn't use his device or accessories for private purposes.

    What Angus can claim as deductions

    Angus claims a deduction of $900 ($75 a month × 12) for his mobile data plan in his tax return.

    As each item, the tablet, keyboard and stylus, cost less than the instant asset write-off threshold, he can also claim the full amount of each as a deduction ($1,200) in his tax return for the first year he uses these items.

    In his tax return for 2019–20, Angus claims a deduction of $2,100 ($900 + $1,200).

    End of example

     

    Example 2 – asset used for business and private use

    Joh is a sole trader. Joh used to use his AUSkey on an old laptop to log in to the Business Portal. But with AUSkey retiring, Joh realises he needs to upgrade his mobile phone to set up a myGovID to access ATO online services. He decides to upgrade his laptop at the same time.

    Joh purchases a new laptop for $1,300 and a mobile phone for $1,100 on 1 February 2020.  He continues to use his previous mobile plan with his new mobile phone, which costs $50 a month.

    Joh only uses his new laptop for his business. Based on his itemised bills and other records he maintains during the income year for use of his old and new mobile phones, Joh works out that he used his phone 80% for business purposes for the entire year of income.

    Joh is registered for GST and lodges a quarterly BAS.

    What Joh can claim

    The cost of Joh's laptop is less than the instant asset write-off threshold and he only uses it for his business. So he claims the full cost of the laptop as a deduction in his 2019–20 tax return, less the GST credits he claimed in his March quarterly BAS.

    The cost of Joh’s new phone is also less than the instant asset write-off threshold. But because Joh uses his phone for both business and private use, he apportions its purchase price and the cost of his monthly plan (after excluding the GST credits claimed) at 80% business use.

    Joh calculates the GST credit (rounded down to whole dollars) that he can claim in his March quarterly BAS as follows:

    • computer – $1,300 × 1/11 = $118
    • mobile phone – $1,100 × 1/11 = $100 × 80% = $80
    • mobile phone plan – $50 × 3 months = $150 × 1/11 = $13.64 × 80% = $10
    • total GST credit for March quarterly BAS = $118 + $80 + $10 = $208.

    Total GST credit (rounded down to whole dollars) for September, December and June quarterly BAS for mobile phone plan = $10.

    Joh calculates his deduction for his new computer, mobile phone and his monthly plan as follows:

    Computer

    = $1,300 − $118

    = $1,182

    Mobile phone

    = ($1,100 − $100) × 80%

    = $800

    Monthly plan

    = (($150 − $10) × 4 quarters) × 80%

    = $448

    Total deduction for mobile phone and plan = $800 + $448 = $1,248.

    In his 2019–20 tax return, Joh claims a deduction of $1,182 for his laptop and a deduction of $1,248 for his mobile phone expenses.

    End of example

    See also:

    Employers purchasing mobile devices for employees

    Employers who provide employees with new mobile devices and data plans so they can set up and use myGovID to access our online services for work purposes will be entitled to a deduction for the expenses described above.

    Where the mobile device you provide is used primarily by your employee for work purposes, it will generally be exempt from fringe benefits tax. There's no need for you to track the actual use of the mobile device by your employee as long as you make it clear to them that the mobile device is to be used primarily for work purposes.

    If the mobile device you provide to your employee isn't going to be used primarily by your employee for work purposes, you may have fringe benefits tax obligations.

    Example 3 – medium-sized business provides employees with mobile devices on data plans

    AXK Pty Ltd operates a medium-sized business (with a turnover under $50 million) and has 1,000 employees. 40 employees require access to the Business Portal to carry out their duties.

    On 3 February 2020, AXK Pty Ltd purchases 40 smartphones for these 40 employees. AXK Pty Ltd pays $385 (including GST) for each smartphone. They also set up plans for each smartphone to cover calls, internet access and data for $50 a month per smartphone (including GST).

    AXK Pty Ltd also gives these 40 employees authorisation to access our Business Portal through Relationship Authorisation Manager (RAM).These employees will use their smartphones to:

    • set up a myGovID
    • log in to our online services using their myGovID
    • make and receive work calls.

    When AXK Pty Ltd issues the smartphones to its 40 employees, it makes it clear that the smartphones are to be used primarily for work purposes. Therefore, AXK Pty Ltd's provision of the smartphones will be exempt from fringe benefits tax.

    What AXK Pty Ltd can claim

    In its business activity statement (BAS) for the quarter ended 28 February 2020, AXK Pty Ltd claims a credit of $1,400 (($385 × 1/11) × 40) for the GST paid on the purchase of the 40 phones. In that same BAS and in each one after that, for the duration of the phone plans, AXK Pty Ltd claims a credit for the monthly GST amount on the phone plans (($50 × 1/11) × 40 = $182 a month).

    As the expense of each smartphone is less than the instant asset write-off threshold, AXK Pty Ltd claims a deduction for the full cost of each smartphone in the first year of use, less the amount of GST credits they already claimed in their BAS. AXK Pty Ltd's deduction for the smartphones in the 2019–20 year is $14,000 ($350 × 40).

    AXK Pty Ltd also claims a deduction for the expense of the 40 monthly plans, reduced by the GST credits claimed in its BAS. AXK Pty Ltd's deduction for the plans in the 2019–20 year is $7,272 ($45.45 a month × 40 × 4 months).

    In its 2019–20 tax return, AXK Pty Ltd claims a deduction $21,272.

    End of example

    See also:

    Employees who use their own mobile devices

    If, as an employer, you pay allowances or reimbursements to your employees so they can use their own mobile device to set up and use myGovID, those expenses will also be deductible.

    See also:

      Last modified: 24 Mar 2020QC 61910