Private ruling: Work Related Deductions
Date of advice: 9 May 2018
Published: July 2018

Ruling: Q1: Are your internet access costs fully deductible? | A1: No | Q2: Is your mobile phone plan fully deductible? | A2: No

Relevant facts and circumstances: You run an imagery business Your place of business is based in your home Internet usage is essential for your business Your current internet plan allows your business to have unlimited broadband access You require the internet for your core business needs You also use your internet for personal reasons Your business requires you to have a mobile phone plan You current mobile phone plan provides you with unlimited calls and text You only use the mobile phone for calls and texts Your mobile phone plan is sometimes used for personal calls and texts You have not kept a diary to determine the private use of your internet plan. You have an itemised mobile phone bill. You have been claiming 50% of your mobile phone usage.

Relevant legislative provisions: Income tax Assessment Act 1997 Subsection 8-1 | Income tax Assessment Act 1997 Paragraph 900-15(1)(b)

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) outlines what you can claim as a general deduction. It states (1) You can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income; or (b) it is necessarily incurred in carrying on a * business for the purpose of gaining or producing your assessable income. (2) However, you cannot deduct a loss or outgoing under this section to the extent that: (a) it is a loss or outgoing of capital, or of a capital nature; or (b) it is a loss or outgoing of a private or domestic nature; or (c) it is incurred in relation to gaining or producing your * exempt income or your * non-assessable non-exempt income; or (d) a provision of this Act prevents you from deducting it. Paragraph 900-15(1)(b) of the ITAA 1997 states that to deduct a work expense you need to substantiate the expense by getting written evidence. Paragraph 5 of Practice Statement Law Administration PS LA 2001/6 Home office and electronic device expenses discusses proving use proportion of home office and electronic device expenses. It states: Where taxpayers provide evidence of the proportion of deductible use for the whole year, such as through 'itemised' supplier records, this provides evidence of business use percentage. Where itemised supplier records are not provided, taxpayer measurement of representative periods of use constitutes evidence. For example, a 'diary' record of use over a four week periods can be accepted. A 'diary' in this context is a record prepared by the taxpayer during the period of use and acknowledged as such by the taxpayer. In other situations a reasonable estimate may be accepted. The taxpayer will have demonstrated to the ATO officer's satisfaction that such a component was reasonably likely under those circumstances. As there is some private use of both your internet and mobile phone plan they would not be fully deductible under section 8-1 of the ITAA 1997. They will only be deductible to the extent that they are used for work purposes. The work related use must be substantiated in accordance with paragraph 900-15(1)(b) of the ITAA 1997.