Employees guide for work expenses

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Part B - Apportioning work-related expenses

You can claim only the portion of an expense that relates to your work activities. When you incur an expense for a purpose that is not 100% work-related, you can only claim the work-related percentage.

For some deduction items there is a specific requirement to keep records to apportion your expenses, such as the logbook method for car expenses (see Logbook method ). Otherwise you need to keep suitable records to show how you have worked out your work-related use. This could take the form of electronic records, data from applications or by keeping a work diary.

Keeping a diary

To help show how you have worked out your apportionment of expenses such as home office items, mobile phone and internet expenses, you can keep a detailed diary for a four-week representative period. This shows the pattern of your usage, and the proportion of work to private use, which you can then apply to the rest of the year. You can use a representative period only if your work use proportion is consistent throughout the year. If your usage fluctuates, you will need to keep records for the whole year.

If you are keeping a diary, you should:

• keep it for a continuous four-week period
• fill it in at the time you undertake the activity, that is you should not fill it in retrospectively, and
• you should include sufficient detail to support your calculations.

Where a home office or internet connection is not just for one person's use, it is important to also show other people's usage as well, such as for a home office that is used both for work purposes and as a study area for children.

Example - shared internet connection

Marcus is keeping a diary of his home internet use. On Monday he works from home and records internet use from 8:00am to 12:00pm and 12:30pm to 3:00pm for work purposes. In the afternoon his children use the internet for schoolwork from 3:30pm to 5:30pm. That evening his family use the internet to stream movies from 6:30pm to 9:30pm and Marcus and his partner browse the internet from 9:30pm to 10:30pm.

Marcus records all of these different sessions in his diary and clearly labels them as work- related or private usage. Once he has done this for four representative weeks he can calculate his usage based on either the percentage of time the internet is used for employment activities versus private use, or for the amount of data downloaded for each separate use.

Once you have established the proportion of your work and private use over a representative four-week period, apply this proportion to your working year. Take out any time when you are not working. For example, if you have a four-week holiday, you can claim a deduction only for 48 weeks' average usage.

The diary, along with itemised bills from suppliers such as telecommunication companies, will help you identify the usage that relates to your employment activities and your private activities.

Example - mobile phone apportionment

Roz is a full time real estate agent and uses her personal phone for work. She has a mobile phone plan that costs $60 per month which includes $600 worth of calls and 4 GB of data. She receives a bill which itemises all of her phone calls and data usage.

Over the four-week representative period Roz made 428 calls of which she identifies 336 as being for work purposes. Roz decides to work out her work use percentage on the volume of calls rather than the time spent on the calls.

Calls for work purposes

Total work calls / Total number of calls = Work use percentage for calls

336 / 428 = 80%

Roz used 3 GB of her allocated data and from her bill she estimates that 2.1 GB was related to her work. She does this by comparing her usage on the bill with her work diary.

Data for work purposes

Total work data use / Total data use = Work use percentage for data

2.1 / 3 = 70%

Roz takes the average of these to determine her work use percentage.

[Work use percentage for calls + Work use percentage for data] / 2 = Overall work use percentage

[80 + 70] / 2 = 75%

Therefore Roz can claim 75% of the total bill of $60 for each month she worked as a real estate agent for the same employer.

Total bill for each month × Overall work use percentage = Monthly amount to be claimed

$60 × 75% = $45

As Roz started on 1 April, she claims for the last three months of the income year.

Monthly claim amount × Number of months = Total claim amount

$45 × 3 = $135

Roz keeps a record of her bill that shows how she worked out the work-related use of her phone.

See more:

• Law Administration Practice Statement PS LA 2001/6 Verification approaches for home office running expenses and electronic device expenses

ATO references:
NO Employees guide for work expenses