FocusOn - Shared business and private usage
 You
are only permitted to claim the work-related portion of your expenses as a
tax deduction. You must, therefore, be able to distinguish between business
and private use for all expenses claimed in your income tax return. For
example, if your home telephone expenses for the year are $850 and you
determine that your work-related phone use is 20%, you can claim $850 x 20%,
which is $170.
Other typical examples of expenses that may need apportionment are postage,
computer costs, tools and equipment, journals etc.
Determining the work-related use component
If the expenses can be clearly identified, such as from an itemised
telephone account, the total value of the work-related items can be claimed
as a deduction. For expenses that cannot be easily identified, such as use
of your home computer, you must maintain a time diary to provide evidence of
your claims.
Home phone, mobiles etc.
Expenses relating to telephone costs including mobiles require specific
treatment.
Cost of calls
Work-related calls may be identified from an itemised telephone account. If
such an account is not provided then local call costs can be claimed using a
reasonable estimate of use, based on a time diary as described below. STD,
ISD and mobile calls must be identified from an itemised telephone account.
Installation or connection costs
The cost of installing or connecting a telephone, mobile phone or any
other telecommunication equipment is not deductible. The additional cost of
obtaining a silent telephone number cannot be claimed.
Rental costs
Taxpayers who are ‘on call’ or are required to contact their employer on
a regular basis may be entitled to claim a portion of the cost of telephone
rental.
Only a portion of the rental representing business use may be claimed. This
calculation is shown below:
Business calls (incoming and outgoing)
Total calls (incoming and outgoing)
Journals, newspapers, periodicals
A deduction will be available for the cost of journals, magazines and
periodicals (which are not general in nature) to the extent that they are
related to the current income-earning activities. Care must be taken when
claiming a deduction for the cost of newspapers or general interest
magazines as the Commissioner is very strict in allowing deductions for
these expenses.
Keeping a time diary
The Australian Taxation Office requires that a diary detailing the
work-related use of an item that is shared between business and private
purposes be maintained to determine the pattern of use. This diary is to be
kept for a period of at least one month in each tax year. By determining an
item’s pattern of use the appropriate deduction can be accurately calculated
and claimed.
The diary must show the item’s entire use for the diary period and clearly
state the purpose (private or business) of each entry. The appropriate
deduction can then be calculated by multiplying the percentage of
work-related use as established in the diary by the total expense.
For each item being claimed, the following information should be kept in the
time diary:
| Evidence |
Notes |
| Date of use |
|
| Total time |
Duration that the item was being used |
| Business or Private |
It is important to stipulate business or private use as
the comparison between the totals is used to determine how much you can
claim. |
| Task |
This is recommended as it creates greater evidence if
requested by the Australian Taxation Office. |
Once the time diary is completed, the following summary information is
required so that the correct claim can be established.
| Summary item |
Notes |
| Date diary commenced |
|
| Date diary finished |
|
| Business use hours |
The business hours is required as a percentage of total
hours to establish the claim amount. |
| Total use hours |
Includes both business and private use hours |
| % to be claimed |
Business hours / Total hours |
Published : 6 July 2007
|
