Mobile Phone Tax Deductions/Depreciation

[peteramjet]

This is specifically relating to personal mobile phones used (as a portion) for work related purposes. With regards to tax deductions and/or depreciation of assets, is it better to purchase the phone outright, or include the phone on a plan?

Assuming the phone is used 60% for work use, and the overall cost is the same between the two options, would it be better to:
1) purchase the phone as part of a plan, paying the phone (and the connection) off over 24 months?
2) purchase the phone outright, and have a separate 'SIM only' plan for 24 months?

With option 1, 60% of the entire monthly cost (phone and plan) could be a deduction.

How would this work with option 2? 60% of the plan cost could be a deduction, however could you depreciate the phone over only the 24 month period as well, and how would that work out financially in comparison? Or is there a way to say 60% of the phone is for work use, and claim a deduction that way?

Trying to sort this issue with a colleague, and getting to the answer on the ATO site is proving difficult. This may not be the place to ask, but somebody here may be able to assist.

[fandtm666]

is a nightmare working it out but you need to
keep a diary for a 4 week period that shows the break down
of related calls for work and personal this is then use to formulate the
percentage claimed.

another way is picking one monthly bill and using 2 different colour highlighters
mark the calls etc and then you can also work out the percentage.

They will not take your word for 40% - 60% etc.

[peteramjet]

They will not take your word for 40% - 60% etc.

Thanks fandtm666 - the 60% deduction usage is from phone usage records. That’s not so much the issue. It’s more if there is a more financially beneficial way of getting the phone - via contract or outright (assuming all other costs are equal).

[admin]

At a guess (note guess), would a plan be better as you are claiming the cost of the phone and the plan, rather than just the cost of the phone ?

With a plan you can usually upgrade at no cost after 2 years, most phones realistically start needing a battery after this time.

There is also leasing, most major telcos are now doing it with a the monthly repayment less (ie, Telstra it is $10 a month cheaper)

[peteramjet]

At a guess (note guess), would a plan be better as you are claiming the cost of the phone and the plan, rather than just the cost of the phone ?

My understanding is the value of the outright phone can be depreciated, meaning there is a tax deduction available. From ATO calculators it seems this is normally done over 3 years, and I can’t see much difference between the two financially, but that is more what I’m looking at more confirming, as tying to confirm the info (as an individual) on their site is difficult.

Leasing doesn’t interest me for a $10 saving - I end up handing the (older) phones down to others.

[admin]

Leasing doesn’t interest me for a $10 saving - I end up handing the (older) phones down to others.

I just upgraded on lease and kept my Samsung S8+ for only $300, about half its current worth.

[peteramjet]

I just upgraded on lease and kept my Samsung S8+ for only $300, about half its current worth.

It may work for some, but leasing on Telstra for me makes no monetary sense. An example:

- iPhone XR 128GB outright everywhere is $1299. Over 24 months that's under $55 p/m.
- SIM Only 30GB plan is $39 p/m.
- If you get the phone outright (or on a 24 month payment plan) and go with the SIM only plan the total over 24 months = $2235.00
- If you get the same phone, with the same data, on a lease plan it is $109 p/m, or over 24 months = $2616.

By leasing the phone you have paid $381 more over 24 months than the equivalent plan. Then you still need to pay the $300 to buy the phone outright. That's an extra $681 over 24 months.

It's the same with latest Galaxy:
- Galaxy S9+ 64GB from JB is $1099. Over 24 months that's under $46 p/m.
- SIM Only 30GB is $39 p/m
- If you get the phone outright (or on a 24 month payment plan) and go with the SIM only plan the total over 24 months = $2035.
- If you get the same phone, with the same data, on a lease plan it is $99 p/m, or over 24 months = $2376.

By leasing the phone you have paid $341 more over 24 months than the equivalent plan. Then you still need to pay the $300 to buy the phone outright. That's an extra $641 over 24 months.

Other carriers or deals may vary, but I've never been able to make the numbers work on Telstra's lease plans.

[lsemmens]

There are/were (not sure now, haven't needed the tax man for about 15 years) taxation advantages to leasing as opposed to outright purchase of any equipment. So, your $700 extra cost might be mitigated to a "saving" time depreciation and running costs are claimed. A good accountant is worth the expense sometimes.