Quick answer
Phone costs are deductible at the work-use percentage, evidenced by a 4-week representative record. The common trap is the working-from-home fixed rate: 70 cents per hour already includes phone costs, so you cannot claim the fixed rate and your mobile bill for the same working-from-home hours. Businesses claim GST credits on the business share.
Is a phone tax deductible in Australia?
Yes, for the work-related share, whether you are an employee, a sole trader, or a company paying for staff phones. The ATO’s framework is usage-based: nobody gets a fixed percentage by right, and the deductible share is whatever a representative record shows. For claims of any substance, that record is a continuous 4-week diary or marked-up itemised bill demonstrating the pattern of work versus private use, applied across the rest of the income year. Time on work calls, work data as a share of household data, and excess-plan costs caused by work are all reasonable bases.
The structural wrinkle unique to Australia is the working-from-home interplay. The fixed-rate method (70 cents per work hour for 2025-26, with the 2026-27 rate to be confirmed by the ATO) bundles phone, internet, energy, and stationery into one hourly figure. Choosing it means those bills cannot be claimed separately for home-working hours; a separate phone claim survives only for work use away from home, such as calls made on site or on the road. The alternative actual-cost method keeps every bill claimable at its own work percentage but demands the full record set. The same choice drives the internet claim and the wider home office claim.
How much can you claim?
Worked example: a site supervisor pays $69 a month on a mobile plan. Her 4-week diary shows 65% of calls and data are work: site calls, deliveries, head-office traffic. The annual claim is $69 x 12 x 65%, which is $538. Her employer does not reimburse her, and she claims actual costs rather than the fixed rate because most of her work phone use happens on site, not at home.
Bundled plans need one extra step: split the bundle into its services first (phone, internet, streaming add-ons) using the supplier’s own breakdown or standalone pricing, then apply a separate work percentage to each service. Handsets follow the $300 line: immediate deduction at the work percentage up to $300, depreciation over effective life above it.
| Situation | Treatment |
|---|---|
| Employee or sole trader, own phone | Work-use percentage, 4-week representative record |
| Fixed-rate WFH method chosen | Phone included in 70c/hour for home hours; no separate claim for those hours |
| Company-provided business phone | Deductible to the business; GST credit claimable |
| Handset up to $300 | Immediate deduction at work percentage |
GST on phone costs
A GST-registered business claims the input tax credit on the business share of plans and handsets, coded GST on Expenses. Employees claiming deductions are outside the GST system; their claim is income tax only. For a company phone used privately by staff more than incidentally, the private share is not a business credit, and expense payment benefits can raise FBT questions worth putting to the accountant.
Record-keeping requirements
Keep the 4-week representative record, the bills, and the handset invoice for five years. If your usage pattern changes (new role, new site, less travel) run a fresh 4-week record; an old percentage rolled forward through changed circumstances is exactly what ATO reviews pick at. Claims under $50 in total can be made with minimal records, but anything meaningful needs the diary.
How to claim, step by step
- Decide the working-from-home method first (fixed rate or actual cost), because it determines whether home-hours phone use is claimable separately.
- Keep a continuous 4-week record of phone use marking work versus private.
- For bundled plans, split the bundle into services using the supplier’s breakdown before applying percentages.
- Apply the work percentage to 12 months of bills, plus the handset at the same percentage (immediate under $300, depreciated above).
- Claim at the other work-related expenses label of the return; businesses claim the GST credit on the business share via the BAS.
- Keep all records five years and refresh the 4-week record when circumstances change.
Common mistakes
- Claiming the 70c fixed rate and separate phone bills for the same home-working hours.
- Using one blended percentage across a bundle instead of splitting the services.
- Claiming a percentage with no 4-week record behind it.
- Ignoring other household members’ use of a shared plan when setting the percentage.
- Writing off an expensive handset immediately instead of depreciating it.
Software that helps
- ATO myDeductions records the usage diary and expenses in the ATO’s own app.
- ExpenseFlow captures the monthly bill from a forwarded email, applies the business-use split you configure along with the GST treatment, and syncs the approved amount to Xero or QuickBooks with the bill attached.
- Dext handles the same capture from forwarded provider emails for practices managing many clients.
FAQ
See the answered questions above for the 4-week record, the fixed-rate interplay, bundles, GST, and handsets.
From ExpenseFlow
GST coding on autopilot
ExpenseFlow reads every receipt, assigns the right GST treatment and account code, and syncs to Xero or QuickBooks Online once you approve.