Phone and internet deductions for sole traders: what you can claim

What is deductible

The business-use share of:

• Mobile phone plans and prepaid credit.
• Home internet and mobile broadband.
• Landline rental and calls, if you still have one.
• The handset, tablet or modem, written off or depreciated at the business share.
• Cases, screen protectors, chargers and repairs, at the same share.

The private share is not deductible, and neither is the cost of a plan for a family member unless they work in the business.

Working out the business percentage

Keep a record for a representative four-week period during the year. For the phone: count business and private calls, texts and, if you can see it, data. For the internet: note the time or data used for business versus private over the four weeks. Divide business by total and that is your percentage for the year.

A sole trader whose itemised bill shows 180 business calls out of 300 and whose data use is mostly client work might land at 60%. Apply 60% to every phone bill for the year. Repeat the exercise once a year, or when your pattern changes. Small claims can be based on a reasonable estimate, but as the amount grows the record becomes the thing that protects it.

Bundled plans

If your bill bundles phone, internet and streaming, or two lines on one plan, split the bundle before you apportion. Identify the cost of each component (the provider usually itemises it, or use their standalone prices as a guide), apply the business percentage to the phone and internet parts, and leave the streaming out entirely.

A phone used only for business

A second handset and plan kept purely for work is 100% deductible, plan and phone, with no apportionment. Many sole traders find this simpler than a diary: one number for clients, one for family, and the business line is claimed in full. The cost of the business handset is deducted in the year under the instant asset write-off if it is under the threshold ($20,000 per asset in recent years; check the current figure).

The working-from-home overlap

This is the one that catches people. The fixed rate method for home office costs (70 cents per hour for 2024-25 and 2025-26, check the ATO for the current rate) covers energy, stationery, computer consumables, and phone and internet. If you use it, you cannot claim any phone or internet costs separately, including mobile use away from home. If your phone and internet are substantial, compare: the fixed rate for your hours versus the actual cost method, which lets you claim phone and internet at your business percentage on top of the other home running costs. See working from home at 70 cents.

GST

If you are registered for GST, claim the business percentage of the GST on each bill and on the handset at label 1B. A $99 monthly plan at 60% business use gives a $5.40 credit. Overseas app subscriptions on the same card are a different question; see GST on overseas subscriptions.

Records

Keep the four-week record, the bills (electronic is fine) and the receipt for the handset. If your bills come by email, forward them to your bookkeeping or attach them to the transaction. In FlowFi, set the business percentage on your phone and internet categories once and every month’s bill is apportioned automatically for both the deduction and the GST credit, with the record attached.