Claiming Phone And Internet As A Business Expense In Ipswich

Phone and internet costs are among the most overlooked deductions for Ipswich business owners, and among the most commonly claimed incorrectly. Whether you're a sole trader working from a home office in Karalee, a tradie taking job calls on a mobile all day, a consultant running client calls and video meetings from Newtown, or a small business owner with a separate office line and broadband account, there are real dollars on the table if you get the claim right.

The good news is that both phone and internet costs are legitimately deductible where they're used to earn assessable income. The catch is that most business owners use the same phone and internet connection for personal and business purposes, and the ATO requires you to apportion the deduction based on actual business use. With more than 4,600 Ipswich businesses turning over between $200,000 and $2 million at June 2025, and the 70-cent fixed-rate working-from-home method now changing how occupancy costs interact with these claims, the right approach is worth understanding before you lodge.

Skyways Accountants helps Ipswich business owners and sole traders identify every legitimate deduction, apply the correct apportionment method, and stay clear of the documentation mistakes that attract ATO attention, starting with a free consultation.

Below, we walk through what qualifies, how to calculate the business-use percentage, what records the ATO expects, and the situations where a conversation with an accountant makes the most difference.

Why phone and internet deductions are simpler than most people think

The core rule is straightforward: if you use your phone or internet to earn income, you can deduct the portion that relates to that income-earning use. Where people go wrong is at two ends of the spectrum. Some claim the entire bill without apportioning for personal use, which the ATO flags as incorrect. Others claim nothing, assuming that because they use the same plan for personal and business purposes, none of it qualifies. Neither approach is right.

The tax compliance discipline here is straightforward once you have a method: work out your business-use percentage, apply it to your costs for the year, and keep the records that show how you got there. The percentage that's appropriate depends entirely on how you use the service, which is different for a tradie taking tools-on-site calls versus a graphic designer running a remote-only business versus an office manager who mostly uses a work system but takes the odd personal call.

What business phone and internet costs can Ipswich owners actually claim?

This is the most common question business owners in Ipswich ask about this deduction, and the answer is broader than most expect. You can claim the business-use share of: your monthly mobile plan (prepaid or postpaid), your home or office broadband plan, data usage charges, and the decline in value (depreciation) of phones, tablets or routers used for work. If you have a dedicated work phone or a separate business broadband connection used exclusively for business, you can claim 100% of that cost without apportionment.

Where a plan is shared between business and personal use, the deductible amount is the business percentage of the total annual cost. For a mobile phone used heavily for work, that percentage might be 80% or more. For a home internet connection used mainly for streaming and personal browsing with incidental work use, it might be 20%. The figure has to be genuinely reflective of use, not a round number picked to maximise the claim.

ATO-approved methods for calculating your business-use percentage

• Four-week representative diary: keep a diary or log of all calls and internet sessions over four consecutive weeks, split between business and personal use. Apply the resulting percentage to your full-year costs. This is the method the ATO specifically endorses for phone claims and is the most defensible if you're ever reviewed.
• Itemised billing method: if your plan provides itemised call records, go through a representative period and identify business calls versus personal calls. Calculate the percentage and apply it to total costs. This works well for mobile plans with detailed billing but is time-consuming for high-volume users.
• Reasonable estimate for low-cost plans: for plans under $50 per month, the ATO accepts a reasonable estimate without a detailed diary, provided the estimate genuinely reflects your usage. You still need to be able to explain your reasoning if asked.
• Dedicated work device or connection: if you have a separate phone or SIM used only for work, or a separate NBN connection at a dedicated office, the entire cost is deductible with no apportionment required. Keep the contract or account records as evidence.
• Home internet bundled with phone: if you pay a bundle plan, apportion the total cost based on a blended estimate of both services' business and personal use. The ATO expects you to consider both components separately before arriving at a combined figure.

How do Ipswich Business Accountants help you claim phone and internet correctly?

Getting the apportionment right, applying it consistently across both phone and internet costs, and making sure the claim interacts correctly with your working-from-home method is where the detail adds up. If you're using the 70-cent fixed-rate working-from-home method, your internet costs are already included in that rate, which means claiming internet costs separately on top would be a double deduction. If you're not using the fixed-rate method and are instead claiming actual home office expenses, internet costs may need to be split between home office deduction and general business use.

An Ipswich business accountant works through these interactions with you, makes sure you're not double-counting, and helps you document the claim in a way the ATO accepts. The difference between a well-supported claim and a loosely estimated one isn't just about the current year's return. It matters if the ATO ever asks questions about your work-related deduction pattern, which is a documented focus area in the ATO's current compliance program.

The mistakes Ipswich business owners make most often with these claims

Claiming 100% of a personal phone bill is the most common error, and it's one the ATO picks up easily when your deduction pattern doesn't match your income type or industry. A PAYG employee claiming their entire mobile bill as a work-related expense when their employer provides a work phone, or a sole trader claiming 100% of a plan that includes a family member's line, are both straightforward audit triggers. The fix is simple: record your actual business use, even roughly, and apply it consistently.

The second most common mistake is the double deduction with the working-from-home fixed rate. If you're claiming the 70-cent-per-hour fixed rate for working from home, that rate already covers your internet, mobile, stationery, and computer consumables. Claiming your broadband bill separately on top of that rate results in a disallowed deduction if the ATO checks. Trying to do your deduction calculations without understanding how these methods interact is a bit like filing a BAS without reconciling your accounts first, you might land close, but the errors compound. The bookkeeping and payroll discipline that prevents these errors in payroll also applies to expense categorisation generally.

Employees, sole traders and company directors: different rules, different claims

How you claim phone and internet costs depends on your employment or business structure, and getting this wrong is a common source of disallowed deductions.

• PAYG employees: claim work-related phone and internet costs in your individual tax return as a work-related expense. You need to have incurred the expense yourself (not reimbursed by your employer), used it directly in performing your work, and have records to support the business-use percentage.
• Sole traders: claim phone and internet costs in your business income section of the return. If you operate from a home office, the interaction with your working-from-home method matters. Costs not covered by the fixed-rate method (such as a dedicated business mobile plan) can still be claimed separately.
• Company or trust: the business entity pays for and deducts the costs directly. If the phone or internet plan is in an individual's name but used for company business, the company should reimburse the individual. If it's treated as a benefit provided to the director or employee, fringe benefits tax may apply depending on the arrangement.
• FBT on mobile phones: a phone provided by an employer primarily for use in the employee's employment is exempt from FBT. If it's used for private purposes more than incidentally, FBT may apply. The distinction matters for companies providing phones to directors or staff.

For sole traders weighing up their business structuring options, the way personal and business costs are separated shifts meaningfully depending on whether you operate as an individual or through a company or trust. That's a broader conversation worth having, especially as your turnover grows.

Frequently Asked Questions

Your Next Steps

Phone and internet deductions look simple on the surface, but the interaction between your working-from-home method, your business structure, and the ATO's documentation requirements means that getting them right takes a few minutes of thought each year. For most Ipswich business owners, a properly documented four-week diary done once and applied consistently is all it takes to support a legitimate, audit-ready claim. The risk isn't that the deduction is complicated; it's that a casual approach to the numbers can turn a valid claim into a disallowed one, or result in underclaiming costs you were fully entitled to.

Ready to find out whether your phone and internet claims are as strong as they could be? Contact the Skyways Accountants team for a free consultation or call 0400 348 482. We'll review your deduction approach, check how it interacts with your working-from-home method and business structure, and make sure you're claiming everything you're entitled to without the risk of overclaiming.