Eligibility to claim home phone and internet services
You can claim a deduction for the cost of your home phone and internet use that relates to your work.
To claim a deduction for home phone and internet services, you must meet all of the following conditions:
- incur the cost and use the service to perform your work duties
- have written evidence of your expenses and a record of your work-related use of the service.
When you use your home phone and internet for both private and work purposes, you need to apportion your deduction. You can only claim the work-related use as a deduction.
You can claim a deduction for the work-related portion of the cost of internet devices or equipment – for example, a router.
Similar rules exist for mobile phones, mobile internet and other device expenses for work purposes.
Exceptions to eligibility for working from home
You can’t claim a deduction for home phone or internet expenses you incur when working from home if you use the fixed rate method to calculate your working from home expenses. These expenses are included in the rate per hour so no separate deduction can be claimed.
You will need to meet the eligibility and record keeping requirements of the work from home method you use.
What you can't claim
You can't claim:
- your use of the home phone or internet (data) for private purposes, such as
- personal emails or phone calls to family and friends
- watching or subscribing to pay television or streaming services (except in limited circumstances)
- seeking employment – as you are not generating employment income from the use of the home phone or internet
- installation and set up costs for the service, for example a connection fee
- expenses for home phone or internet services where your employer or someone else pays directly for it or reimburses you for the expenses.
In limited circumstances you can claim the costs you incur to access pay television or streaming services. You must show a direct connection to your work and your deduction is limited to the part of the content that directly relates to your work.
How to calculate your deduction for home phone and internet use
You can calculate your deduction for work-related home phone and internet use by:
- claiming incidental use ($50 or less), with basic records to show how you calculated your claim – you can claim $0.25 for work phone calls made from your home phone
- keeping records and written evidence to work out actual expenses for work-related use.
How to work out your work and private use
You need to work out your percentage of work use if you use your home phone and internet for work and private purposes. Keep records that show a detailed pattern of use by you and other members of your household.
Home phones generally use the internet to make calls. The cost of phone calls is either:
- covered by an additional monthly amount added to your home internet plan that covers the cost of all phone calls made
- a charge for each phone call you make.
If you use your home phone for work purposes and private purposes and you pay a monthly amount, you will need to apportion the monthly amount.
If you are charged for each phone call you make, you will need to keep a record of your work-related calls. You can claim a deduction for the total amount.
A reasonable basis to work out your work-related internet use could include:
- the amount of data you download for work as a percentage of the total data downloads by you and all other 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 plan amount
- the time spent using the internet for work purposes as a percentage of the time spent by you for private purposes and by your family for any purpose.
Keeping a record (such as a diary note) for a continuous 4-week period is the easiest way to work out your deduction. If you record a continuous 4-week period that represents your work use, you can use it across the rest of the income year to work out your full deduction.
If you don't have a record of a continuous 4-week period, you will need to keep records for the full income year.
If you have a bundled plan that includes other related services, you need to apportion your costs. You can only claim the work-related use of each service.
Example: calculating work use percentage of internet expenses
Sometimes, Sam works from home connecting to his office through a virtual desktop. He keeps a work diary for a continuous 4-week period and compares it to his data usage on his home internet.
Sam calculates his work use percentage on the download amounts. His household uses 240 GB of data in the 4-week period.
Sam calculates that he uses 48 GB while he is working from home. This gives him a work use percentage of 20%, using the formula:
Data used for work ÷ Total data use = Work use percentage
48 ÷ 240 = 20%
Sam's internet costs $60 per month, so the total claim he could make in a month would be calculated using the formula:
Total bill for each month × Work use percentage = Monthly claim
$60 × 20% = $12
As Sam took all of December off, he wouldn't be able to claim a deduction for that month. To calculate his total deduction at the end of the year he uses the formula:
Monthly amount to be claimed × Number of months worked = Total claim amount
$12 × 11 months = $132
End of exampleBundled plans
Internet, home phone and other related services are often bundled together in a plan – for example, pay television or streaming services. 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 of your household also use the services, you need to account for their use in your calculation.
If you have a bundled plan, before calculating your work-related use of each service, you need to identify the cost of each service covered by the plan. Bundled services can be apportioned based on:
- a supplier's breakdown of relative costs of the bundled services
- the relative costs of the bundled services as if they were purchased separately from the same supplier
- information from a comparable supplier.
Once you have identified the cost of each separate service in a bundled plan, you need to identify your work use for each service over a continuous 4-week period during the income year. This will allow you to work out your pattern of work use, that you can then apply to the full income year.
Example: apportioning bundled services
Sujita has a $100 per month home phone and internet bundle.
The bill shows that the monthly cost of Sujita’s phone service in her bundle is $10, and her internet service is $90.
Sujita adds her pay television of $90 per month to her service and receives a $20 per month discount. Her total costs for all services are $170 per month.
Sujita worked for 11 months during the income year, having had one month of leave.
Based on her itemised accounts, Sujita works out that the work-related use of her internet is 20%. Sujita also uses her home phone for work purposes and works out that 10% of her use is for work. Sujita does not use her pay television for work purposes.
As the components are part of a bundle, Sujita calculates her work-related use as follows:
Step 1: work out the value of each bundled component
- Pay television – Sujita does not need to determine the pay television costs as she does not use this service for work purposes.
- Internet:
Discount percentage
= $20 ÷ $170 ⁼ 12%
Discount percentage applied to internet service
$60 per month × 12% = $7.20
- Home phone:
Discount percentage
= $20 ÷ $170 ⁼ 12%
Discount percentage applied to home phone service
$10 per month x 12% = $1.20
Step 2: apportion work-related use
- Internet use: 20% work-related use × $52.80 per month ($60 - $7.20) × 11 months = $116.16
- Home phone use: 10% work-related use × $8.80 per month ($10 - $1.20) × 11 months = $9.68
Step 3: add all amounts
- $116.16 home phone use + $9.68 home internet use = $126
Sujita claims a deduction of $126 in her tax return.
End of example
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 phone calls he makes over a continuous 4-week period, Des works out that 25% of his phone calls are for work purposes.
Des also keeps a record for 4 weeks of the data downloaded. He works out 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.
Although there is no clear breakdown of the cost of each service (phone calls and downloads), Des has checked other providers' comparable products and found that most of them charge $10 per month for a home phone bundled with internet.
It is reasonable for Des to use supplier information for comparable products to determine the monthly cost of each service. .
Step 1: work out the value of each bundled component
- Internet: $80 per month ($90 - $10 for home phone as per other providers)
- Home phone: $10 per month (as per other providers)
Step 2: apportion work-related use
- Internet: 30% work-related use × $80 per month × 11 months = $264
- Home phone: 25% work related use × $10 per month × 11 months = $27.50
Step 3: add all amounts
- $264 internet use + $27.50 home phone use = $291.50
In his tax return, Des claims a deduction of $292 for the year.
End of exampleKeeping records for home phone and internet services
You must keep written evidence of your expenses and records to support your work use of your home phone and internet.
Written evidence and records you need to keep may include:
- diary entries, including electronic diary records showing your work use
- monthly bills for internet services
- monthly bills for home phone services
- monthly bills for bundled plans.
If you're claiming incidental use ($50 or less), you will need basic records to show how you calculated your claim.
For more information on general record keeping requirements and formats, see records you need to keep.