Work Related Phone and Internet Deductions

You can claim work related phone and internet deductions for the work-related portion of your costs if you paid the expense yourself, weren't reimbursed, and can show how that work-use percentage was calculated. For many Australians, the main concern isn't whether a claim is possible. It's whether the claim is practical to substantiate and whether detailed apportionment is worth the effort.

That question comes up often for employees who use their own mobile and home internet while working remotely, and for sole traders who rely on the same services to run day-to-day work. In FY 2025-26, the ATO approach is still centred on a simple idea: mixed-use expenses must be split between private and income-producing use, and rough guesses aren't enough where records should exist.

Many taxpayers assume phone and internet are either fully deductible or not deductible at all. In practice, neither view is usually right. Employees need to consider whether the cost relates directly to earning their employment income and whether the expense was unreimbursed. Sole traders also need to separate private use from business use, even where the service is clearly important to the business.

A common pattern seen in Brisbane tax accountant support is that people keep the bill but not the usage evidence. Baron Tax & Accounting often sees workable claims reduced or abandoned because the taxpayer can't show how the work percentage was reached. The claim usually stands or falls on records, not intention.

Table of Contents

• Introduction

• When Can You Claim Phone and Internet Expenses - Employees - Sole traders and freelancers

• How to Calculate Your Work-Related Usage Percentage - Start with a representative period - Match the evidence to the type of service - Comparison of Calculation Methods

• Actual Cost vs Fixed Rate Method What's Best for You - What the fixed rate includes - When actual cost may still be worth the work - Records that support each approach

• What Records Do You Need for Phone and Internet Deductions - Core documents to keep - What tends to weaken a claim

• Special Rules for Sole Traders GST and BAS - How GST changes the deduction process - When sole traders need tighter apportionment

• Frequently Asked Questions - Can an employee claim phone and internet if working from home was expected by the employer - Can a taxpayer claim the full home internet bill - What if the taxpayer chose the fixed rate for work from home - Is an itemised mobile bill enough on its own - Can a second phone service be claimed - Are bundled plans harder to claim

• Summary and Key Considerations

Introduction

The starting point is straightforward. The ATO generally allows a deduction only for the work-related portion of phone and internet costs, and only where the expense isn't private or reimbursed, as outlined in this ATO-based explanation of phone and internet deductions. That matters most where one household service is used for both work and personal life, which is the normal arrangement for remote and hybrid workers.

For employees, the deduction question usually turns on whether the cost has a real connection to earning salary or wages. If a worker is expected to be contactable, work from home, or use a personal service for employment tasks, there may be a claim for the work-related share. If the employer reimburses the cost, that usually removes the deduction.

For sole traders, the analysis is usually more direct because the service is part of running the business. Even then, the business portion must be separated from private use. A single mobile plan or home internet service doesn't become fully deductible just because business activity takes place on it.

Practical rule: If a bill covers both personal and work use, the claim needs a reasonable method of apportionment and records to support it.

The difficult part isn't the concept. It's applying it consistently. A taxpayer who can show how the percentage was worked out is in a much better position than someone who estimates a figure that feels reasonable.

When Can You Claim Phone and Internet Expenses

A claim usually works only when three things line up. The taxpayer paid the expense, the expense relates to earning assessable income, and records exist to show both the cost and the work-related portion.

That sounds simple, but mixed-use services create the usual problem. A home internet connection might support video meetings, cloud systems, and client calls during work hours, then family streaming and personal browsing later. The fact that work use exists doesn't make the full bill deductible. The private component still has to be excluded.

Employees

Employees often ask whether being required to answer calls or work from home is enough on its own. It isn't enough by itself. The stronger claim is where the employee personally bears the cost, uses the service in carrying out employment duties, and isn't reimbursed.

A few practical indicators usually support the claim:

• Personal payment: The bill is in the taxpayer's name or paid from the taxpayer's own funds.

• Employment connection: The service is used for genuine work tasks such as calls, messages, online systems, meetings, or remote access.

• No reimbursement: The employer hasn't already covered the same cost.

Sole traders and freelancers

For sole traders, phone and internet are often ordinary operating costs. That doesn't remove the need to apportion use. If the same mobile phone handles customer calls and private family contact, only the business share may be deductible.

Taxpayers often overstate claims without meaning to. A plan may be essential for business, but the ATO still expects the claim to reflect actual business use rather than convenience.

A workable claim usually starts with a boring document trail. Bills, payment evidence, and usage records matter more than broad explanations.

For some taxpayers, it also helps to compare likely outcomes before spending hours on calculations. A simple Australian tax calculator can help frame the broader return, although the deduction itself still needs proper substantiation.

How to Calculate Your Work-Related Usage Percentage

Work-related phone and internet claims usually turn on one question: what share of the service was used for work?

The ATO expects a reasonable basis for that percentage. For internet, a continuous 4-week record is commonly used because it gives a practical sample of normal use. If that period reflects an ordinary pattern, the same percentage can usually be applied more broadly until the pattern changes.

A short, disciplined record is often enough. The point is not to create perfect data. The point is to create a claim you can explain.

Start with a representative period

For mixed-use services, a representative period is usually the safest starting point. That might mean four weeks of internet use across a normal work cycle, or a review of itemised phone records where work calls can be identified clearly.

The percentage then comes from actual use, not a rough guess. If work tasks account for one-fifth of the relevant usage during a typical period, one-fifth of the eligible cost is generally the deductible share.

Often, taxpayers make a poor trade-off. They spend time chasing a slightly higher percentage without keeping records that would support it later. A lower, well-supported claim is usually in a stronger position than a larger estimate built on memory.

Match the evidence to the type of service

Different services call for different records.

• Internet used by the whole household: Keep a usage diary for a representative period and note how work use was measured.

• Phone plans with itemised calls: Mark the work-related calls and calculate the work share from those records.

• Incidental work calls only: For low-level phone use, the ATO allows a simplified claim of $0.25 per work call where the total incidental claim is $50 or less.

That simplified phone method can be practical for employees who only make occasional work calls from a personal mobile. It becomes less useful once work use is regular, mixed across calls and data, or tied to broader monthly plan costs. At that point, a proper usage percentage usually gives a cleaner result.

Taxpayers who want the wider context on work-from-home claims can also review Baron Tax & Accounting's guide to ATO home office expenses and tax deduction calculation.

Comparison of Calculation Methods

Method	Best For	Record-Keeping Requirement
Representative usage diary	Mixed-use internet or shared household services	Notes showing how work use was measured over a representative period
Itemised bill review	Phone plans where work calls can be isolated	Annotated bills and a clear calculation of work-related calls
Simplified per-call claim	Low incidental work calls	Count of work calls and support that the claim stays within the incidental limit

The best method is usually the one that gives a reasonable result without creating more compliance work than the claim is worth.

Actual Cost vs Fixed Rate Method What's Best for You

For many work-from-home employees, the key decision extends beyond whether phone and internet are deductible. It's whether claiming them under an actual cost approach is worth the extra compliance work when the ATO fixed rate may already cover them.

From 1 July 2024, the ATO's fixed-rate method covers phone, internet, electricity and other running costs at 70 cents per hour, and taxpayers who use that method must keep records of hours worked from home but can't separately claim those bundled expenses.

What the fixed rate includes

The practical attraction of the fixed rate is simplicity. If a taxpayer uses that approach, the focus moves away from splitting each phone and internet bill and onto keeping a reliable record of work-from-home hours.

That can be the better option where:

• Work use is modest: The likely separate claim may not justify the extra record keeping.

• Records are incomplete: Bills exist, but usage evidence is weak.

• Time matters: The administrative burden of detailed apportionment outweighs the likely tax effect.

When actual cost may still be worth the work

The actual cost approach may still suit some taxpayers, especially where work use is material and records are strong. That's more likely where someone has clear logs, itemised bills, and a stable usage pattern that can be measured without difficulty.

It may also be more relevant for sole traders who aren't choosing between employment work-from-home methods in the same way an employee would. The key point is that actual cost isn't automatically better just because it feels more precise. It only helps if the records are complete enough to support the calculation.

A larger-looking deduction on paper can become a weak claim if the taxpayer can't show how the percentage was established.

Records that support each approach

A practical comparison often helps:

• Fixed rate users should keep a reliable record of hours worked from home and avoid separately claiming expenses that the rate already bundles.

• Actual cost users should keep the bills, proof of payment, and the working papers used to calculate business or work use.

• Anyone comparing the two should choose the method they can support cleanly, not the one that only looks better at first glance.

For employees lodging online, that choice is often one of the main accuracy points in an online tax return in Australia.

What Records Do You Need for Phone and Internet Deductions

Substantiation is where many otherwise reasonable claims break down. The ATO expects records that show the expense was incurred and records that show how the deductible portion was worked out.

Core documents to keep

A sound file usually includes:

• Bills or invoices: These show the service provider, billing period, and amount charged.

• Proof of payment: Bank records or card records help show the taxpayer paid the expense.

• Usage evidence: This may be a diary, an annotated bill, or another record that explains the work-use percentage.

• Employer evidence where relevant: If an employee was expected to work from home or be contactable, a written policy, email, or similar internal instruction can help support the connection to employment duties.

For taxpayers managing digital records, organised extraction and filing can save time. Where statements arrive as PDFs, structured PDF data extraction methods can help turn bills into searchable records for review and retention.

What tends to weaken a claim

Some records don't fail because they're false. They fail because they're incomplete or too vague to test.

Common problems include:

• Only keeping the monthly total: The bill amount is saved, but there's no support for the work percentage.

• Using a rounded estimate: A percentage is claimed without any diary, itemised bill, or usage logic behind it.

• Ignoring reimbursements: Part or all of the cost was covered elsewhere.

• Blending methods: A taxpayer tries to separately claim costs that are already included under another approach.

A simple record-keeping habit is often enough. Save the bill, note how the percentage was reached, and keep those notes with the tax records rather than trying to reconstruct the claim later.

Special Rules for Sole Traders GST and BAS

Sole traders have an extra layer to consider where GST registration applies. The phone or internet expense may affect both the BAS and the income tax return, so the numbers have to be treated consistently.

How GST changes the deduction process

Where a sole trader is registered for GST and the expense relates partly to business use, the GST position and the income tax deduction need to align with the business-use percentage. The same apportionment logic still applies. Private use stays private.

The practical point is to avoid claiming the same component twice in different forms. If GST credits are being claimed through BAS reporting, the income tax deduction should reflect that treatment rather than overstating the final deductible amount.

Taxpayers who are still sorting out registrations or reporting obligations may need broader guidance on setup and reporting. Baron Tax & Accounting also provides information on ABN registration, and BAS-related obligations are discussed in its guide to BAS reporting.

When sole traders need tighter apportionment

A sole trader often has more frequent business use than an employee, but that doesn't remove the need for evidence. If one mobile service is used for client calls, personal calls, supplier messages, and private browsing, the records should show how the business portion was determined.

This matters most where the service is heavily relied on but not separately dedicated to the business. The more mixed the use, the more important the apportionment method becomes.

Frequently Asked Questions

Can an employee claim phone and internet if working from home was expected by the employer

Possibly. The claim usually depends on whether the employee paid the expense personally, used it in earning employment income, and wasn't reimbursed. The deductible amount is limited to the work-related portion.

Can a taxpayer claim the full home internet bill

Usually not. A home internet service is commonly a mixed-use expense, so private use should be excluded and the claim should be based on a supportable work-use percentage.

What if the taxpayer chose the fixed rate for work from home

If the fixed-rate method is used, bundled running costs covered by that method generally can't also be claimed separately. The main issue then becomes keeping proper records of work-from-home hours.

Is an itemised mobile bill enough on its own

Sometimes, but only if it clearly shows which use was work related and the bill reflects a representative pattern. Where work use is broader than identifiable calls, additional notes or a diary may still be needed.

Can a second phone service be claimed

It may be deductible to the extent it relates to work or business use and isn't private. The stronger claims are usually those where the second service has a clear work function and the records show that pattern.

Are bundled plans harder to claim

Yes, they often are. Bundled plans can blur the cost of different services, which means the taxpayer needs a sensible basis for apportionment and should keep the working papers that explain it.

Summary and Key Considerations

Work related phone and internet deductions are available in Australia, but only for the work-related portion of costs the taxpayer paid and wasn't reimbursed for. That principle applies to employees and sole traders alike. The difference is usually in how the service connects to income and how the records are maintained.

For many employees, the most important decision isn't whether some part of the bill is technically deductible. It's whether detailed actual-cost apportionment is worth doing when the fixed-rate work-from-home method may already cover those running costs. For others, especially where records are strong and work use is clear, actual cost may still be appropriate.

Before lodging, it helps to review a short checklist:

• Check payment: The taxpayer must have borne the cost personally.

• Check private use: Private components should be excluded.

• Check reimbursement: Reimbursed amounts generally can't also be claimed.

• Check evidence: Bills alone aren't enough if the work-use percentage can't be explained.

• Check method consistency: The claim should fit the method chosen for related work-from-home expenses.

In more complex situations, a return may be reviewed by a Registered Tax Agent to help check compliance, records and accuracy before lodgement.

This content is provided for general information purposes only. Outcomes vary depending on individual circumstances. For specific tax decisions, please consult a qualified professional.

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