Working from home and using a personal mobile phone for work have become common for many Australian employees and professionals. But does that automatically mean you can claim these costs on your tax return?

Not necessarily.

As Latitude Accountants CEO John Saade explained when reviewing a real redacted ATO audit letter, taxpayers need to be able to demonstrate that their claimed expenses are genuinely connected to earning their income. This is particularly important for expenses that can have both work and private use, such as mobile phones and home office costs.

If you claim these expenses, you need appropriate records to support the work-related portion of your claim. The stronger your documentation, the easier it can be to explain your deductions if the ATO asks questions.

Can You Claim Mobile Phone Expenses for Work?

You may be able to claim the work-related portion of your mobile phone expenses where the relevant requirements are satisfied.

However, simply using your phone for work does not mean the entire bill is deductible.

Your claim needs to reflect the portion of your phone use that relates to earning your income rather than private use.

For example, if your phone is used for both work calls and personal social media, messaging and entertainment, you generally need to distinguish between the two when determining your work-related claim.

What Evidence May You Need for a Mobile Phone Claim?

If the ATO reviews your mobile phone deduction, you may need evidence demonstrating why and how you use the phone for work.

Depending on your circumstances, this can include:

• An employer letter confirming you were required to use your own mobile phone for work.
• Details of any allowances or reimbursements received from your employer.
• An itemised phone bill.
• Records identifying work-related and private use.
• A diary covering a representative four-week period.
• Calculations showing how you determined your work-related percentage.

The key is being able to explain how you arrived at the amount claimed.

Why Is the Work-Related Percentage Important?

One of the potential problems with phone deductions is claiming an arbitrary percentage.

For instance, claiming that 90% of your mobile phone use is work-related should be supported by evidence. If your records do not support that percentage, the ATO may question the claim.

John Saade highlighted this issue in the audit example, noting that taxpayers need to be able to explain how their percentage was calculated.

Your phone may be essential to your job, but personal use still needs to be considered.

Can You Claim Home Office Expenses?

Working from home does not automatically make every household expense deductible.

If you are eligible to claim home office expenses, you need to establish the work-related portion of the relevant costs and maintain records supporting your calculation.

Your circumstances and the method used to calculate your expenses will determine what records you need to keep.

Keep a Record of Your Working-From-Home Pattern

One important form of evidence discussed by John Saade is a diary covering a representative four-week period.

This can help demonstrate:

• How often you worked from home.
• The pattern of your home office use.
• The days or periods during which you worked from home.
• The relationship between your home office use and your employment.

The purpose of maintaining this type of record is to demonstrate your actual working pattern rather than relying on a rough estimate.

Keep Your Home Office Expense Records

You should also retain appropriate records for the expenses you are claiming.

Depending on your circumstances, this may include:

• Relevant receipts and invoices.
• Utility records.
• Internet bills.
• Office equipment receipts.
• Records of other eligible running expenses.
• Calculations showing the work-related portion.
• Employer documentation where relevant.

The records should allow you to explain both the expense and how you determined the amount related to your income-earning activities.

What About Internet Expenses?

Internet use can also have both work and private components.

If you use your home internet connection for work and personal activities, you may need to determine the appropriate work-related portion rather than automatically claiming the entire cost.

Your records should support the percentage or amount you claim.

This is another reason why maintaining a consistent record of your work-related use can be valuable.

Why Employer Confirmation Can Matter

In the ATO audit example discussed by John Saade, employer confirmation appeared repeatedly among the evidence requested for certain expenses.

For mobile phone expenses, an employer may need to confirm that you were required to use your own phone for work and provide relevant information about allowances or reimbursements.

Similar evidence may be relevant to other work-related expenses depending on the circumstances.

This demonstrates an important principle: your personal statement about how you use an expense may not always be enough. Independent evidence can help support the claim.

What Records Should You Keep?

A simple record-keeping system can make it much easier to support your deductions.

For mobile phone and home office expenses, consider keeping:

Mobile Phone Records

• Itemised phone bills.
• Work-related call records where applicable.
• Private-use records.
• A representative four-week diary.
• Employer confirmation.
• Records of allowances or reimbursements.
• Your calculation of the work-related percentage.

Home Office Records

• A diary showing your working-from-home pattern.
• Receipts and invoices for relevant expenses.
• Internet and utility records where applicable.
• Equipment purchase records.
• Calculations supporting the work-related portion.
• Employer documentation where relevant.

Keep these records organised throughout the year rather than trying to recreate them when preparing your tax return or responding to an ATO review.

What If the ATO Questions Your Phone or Home Office Deduction?

Receiving an ATO review or audit letter does not automatically mean you have done something wrong.

However, you should take the correspondence seriously.

If the ATO asks you to substantiate your mobile phone or home office expenses, start by identifying exactly what claims they are reviewing and what evidence they have requested.

Then:

1. Review the relevant tax return.
2. Identify the expenses you claimed.
3. Gather your receipts and supporting records.
4. Check how you calculated the work-related portion.
5. Review any employer confirmation or reimbursement information.
6. Pay attention to the response deadline.
7. Seek professional advice if you are uncertain about your position.

Do not simply send documents without understanding what they prove. You should be able to connect the evidence to the actual deduction you claimed.

Avoid Overclaiming Work-Related Expenses

One of the biggest lessons from John Saade’s discussion of the ATO audit letter is the importance of substantiation.

A deduction should not be based on what you think you can get away with claiming. It should be based on what you can legitimately support.

This is especially important for expenses that have both work and private use.

Before claiming an expense, ask yourself:

• Did I personally pay for it?
• Was it reimbursed by my employer?
• Is it directly connected to earning my income?
• Can I prove the expense?
• Can I demonstrate how I calculated the work-related portion?

If you cannot answer these questions confidently, it may be worth speaking with an accountant before lodging your return.

Keep Your Records Before You Need Them

The easiest time to substantiate a deduction is while you are actually incurring the expense.

Trying to remember how often you worked from home several months later or estimating how much you used your phone for work can create unnecessary difficulties.

Instead, develop a simple record-keeping routine.

Save receipts digitally, keep relevant bills, record your working-from-home pattern, and document how you calculate your work-related use.

Good records can help you and your accountant prepare an accurate tax return and provide evidence if the ATO later asks questions.

Frequently Asked Questions About Mobile Phone and Home Office Expenses

Can I claim my entire mobile phone bill as a tax deduction?

Not necessarily. If your phone has both work and private use, you generally need to determine the appropriate work-related portion rather than automatically claiming the entire cost.

How can I prove my mobile phone is used for work?

Depending on your circumstances, evidence may include itemised bills, a representative four-week diary, employer confirmation and calculations showing how you determined your work-related percentage.

Can I claim expenses for working from home?

You may be able to claim eligible home office expenses if you meet the relevant requirements. You need to keep appropriate records and calculate the work-related portion correctly.

Do I need an employer letter to claim mobile phone expenses?

An employer letter may be relevant where your employer required you to use your own phone for work. The evidence required can depend on your circumstances and the type of claim.

What happens if I cannot substantiate my deduction?

If you cannot provide sufficient evidence for a deduction when the ATO asks for it, the claim may be reduced or disallowed. Additional tax, penalties or interest may also apply depending on the circumstances.

Get Help With Your Tax Deductions

Mobile phone and home office deductions can be legitimate expenses when the relevant requirements are met, but accurate calculations and good records are essential.

Latitude Accountants helps individuals and businesses across Australia with taxation, accounting and proactive financial advice. If you need help understanding your deductions or responding to an ATO review, our team can help.

Latitude Accountants

📍 Sydney Olympic Park | Marrickville | Melbourne | Loxton
📞 1300 706 597
📧 info@latitudeaccountants.com.au

Disclaimer

This article provides general information only and does not constitute financial, legal, tax, or business advice. Tax rules and deduction requirements can vary depending on individual circumstances. Speak with a qualified accountant or tax adviser for advice relevant to your situation.