Tax Deduction on Mobile Phone

OzFrugie on 13/09/2018 - 23:07
Last edited 13/09/2018 - 23:08

So, the story is that I got sucked in by those ebay promo (PAMPER20, I think it was) and bought a new mobile phone before EOFY.
Let's say the purchase price was $1000, and bought in May.

Now, assuming the mobile is used 50% for my job, how much can I claim in FY18 tax return as deduction?
My understanding (I just realised this) is that I cannot claim $500 (50% x $1000) entirely for FY18 as deduction because it's higher than $300, so that it cannot be claimed as Low Asset Pool(?), and I don't have ABN (I am normal PAYG). Is this right?

Does it need to be claimed as depreciating asset? If so, what is the depreciation schedule for a mobile phone for tax deduction purpose?

Any guidance will be appreciated.

Cheers

P.S. I know some of you will think 'Ask your accountant', but being an Ozbargainer I want to avoid using one this year as my tax return should be straight forward. I used one before, paid higher than average, only to tell him that his numbers were wrong and I had to correct him (!)

Financial Mobile Phone Tax Deduction

Comments

  • nicolemcmilllon on 14/09/2018 - 08:07
    +15

    Mobile phone effective life is 3 years based on Taxation Ruling 2018/4.

    This means you can depreciate it at 66.67% each year, apportioned for the days in the year that you had the phone.

    For example, if you had it on 1 May 2018 and it cost $1,000 you would be able to claim a deduction of $111 in your 2018 return ($1,000 x 66.67% x 61/365 days).

    Source: I am a tax agent.

    • altomic on 14/09/2018 - 08:43
      +3

      Thread closed

    • nicolemcmilllon on 14/09/2018 - 09:15
      +4

      Before I forget, this has to be apportioned for the work related percentage, in your case 50%.

      • foxmulder on 14/09/2018 - 09:44
        +1

        Confuse, why 66.67 not 33.33?

        • Kangal on 14/09/2018 - 09:53

          I want to avoid using an accountant. I used one before, paid higher than average, only to tell him that his numbers were wrong and I had to correct him (!)

          You correcting the Accountant on behalf of the OP ?

        • nicolemcmilllon on 14/09/2018 - 09:54
          +2

          Using the diminishing method, effectively you are able to double the % to accelerate the deduction. Just an accounting method.

        • Scab on 14/09/2018 - 09:56
          +1

          @nicolemcmilllon:

          Hi Nicole,

          Is there a way of getting a tax return when I don't pay any?

        • Mentallysick on 14/09/2018 - 09:59

          @Scab: yes as a low income tax offset

        • nicolemcmilllon on 14/09/2018 - 10:01
          +1

          @loveishell:

          Sorry that is incorrect again. A low income tax offset can only reduce your tax to zero. It is known as a non refundable tax offset. Meaning if you don't use the full offset, the remainder is not refunded to you.

        • Mentallysick on 14/09/2018 - 10:02

          @nicolemcmilllon: Thank you i appreciate for the correction. Can i carry forward?

        • nicolemcmilllon on 14/09/2018 - 10:02

          @loveishell:

          No you can't.

        • Mentallysick on 14/09/2018 - 10:03

          @nicolemcmilllon: Are you tax savy?

        • HighAndDry on 14/09/2018 - 10:14
          +2

          @loveishell: Obviously more so than you.

        • Scab on 14/09/2018 - 10:50

          @HighAndDry:

          I'm tax savvy, in the last 20 years I've paid zero income tax.

          Pretty savvy.

        • Mentallysick on 14/09/2018 - 10:59

          @HighAndDry: yes i can tell. are you savy too?

        • Mentallysick on 14/09/2018 - 11:00

          @Scab: How? Please tell me. I pay every year around $20,000 just in tax.

        • foxmulder on 14/09/2018 - 11:04

          @loveishell: like what Jerry said to Kramer: it's easy to pay no tax if no income :)

        • Mentallysick on 14/09/2018 - 11:08

          @foxmulder: I aint want no income.

        • HighAndDry on 14/09/2018 - 12:02

          @loveishell: I want outcomes dammit!

        • Mentallysick on 14/09/2018 - 12:09

          @HighAndDry: yes Thank you

        • OzFrugie on 14/09/2018 - 19:56

          @nicolemcmilllon:

          Thank you @nicolemcmillon.

          I am a bit confused on the percentage too. You said 66.67% each year and the effective life is 3 years, so 3 x 66.67% = 200% after 3 years??

          Or did you mean 66.67% (1st year) and 33.33% (2nd and 3rd year) ?
          If this is the case, can I choose which year I claim the 66.67% on (not the first year), because the first year (FY18) I can only claim 61 out of 365 days, reducing my deduction..

          Also, if I remember correctly in the past, my (ex) accountant put it under Low Asset Pool on the second year (it was a cheaper phone $700). I think it was because the residual value after 1st year depreciation was less than $300.
          Is this correct/possible?

          Thanks again

        • foxmulder on 14/09/2018 - 20:06
          +1

          @OzFrugie: 66.67% on the first year and 66.67% on the remaining value for the year after and so on. SEe this article: https://www.ato.gov.au/business/depreciation-and-capital-expenses-and-allowances/general-depreciation-rules---capital-allowances/prime-cost-(straight-line)-and-diminishing-value-methods/

        • OzFrugie on 14/09/2018 - 20:43

          @foxmulder:

          Thanks foxmulder.

          If my understanding is correct, in my case then:

          FY18: 50% x (61/365) x 66.67% x $1000 = $56
          FY19: 50% x (365/365) x 66.67% x ($1000-$56) = $315
          FY20: 50% x (365/365) x 66.67% x ($944-$315) = $210
          FY21: 50% x (304/365) x 66.67% x ($629-$210) = $116

          Is this correct?

          I saw the link to Low Value Pool (Asset) and assuming the mobile phone cost is less than $1000, will it not be better to put it under LCA, so I can deduct 50% x 18.75% x $1000 on the first year?

  • Mentallysick on 14/09/2018 - 09:57
    -4

    You can claim 50% of $1,000 for the 2018 as any asset less than 20,000 can be written off instantly.

    Thanks

    • nicolemcmilllon on 14/09/2018 - 09:59
      +9

      That is incorrect. The $20,000 instant write off only applies to businesses. OP clearly states they do not have an ABN and that they are an employee.

      • dasher86 on 14/09/2018 - 10:19
        +2

        bringing the smackdown!

    • chumlee on 14/09/2018 - 20:50

      Love the way you thank yourself even though you are completely wrong.

  • spal on 14/09/2018 - 13:14
    +1

    You have already received good advice here from nicolemcmillion. Just want to add further on that advice, it is not what you think how much is work use, you are actually required to keep records for four weeks to demonstrate that your estimate of work-private ratio is reasonable. This page may assist you further https://www.ato.gov.au/Individuals/Income-and-deductions/Ded…

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