The depreciation rate of a mobile phone based on the Commissioner’s effective life estimate of 3 years is
- 66.67% on a diminishing value basis; or
- 33.33% prime cost
The effective life of a mobile phone is published by the Commissioner in the Effective Life Tables, Table B.
Inclusion in Table B means that the effective life determination applies across all industries.
As is the case with depreciating assets more generally, deductions for costs associated with a mobile phone (including depreciation) are allowable to the extent that the phone was used in earning assessable income. Where there is a part business usage an apportionment of the tax claim would be required.
For tablets and laptops – see Depreciation of Computers
Other depreciation claim choices
Adopting the Commissioner’s effective life determination as the basis for a depreciation claim is one option. Further options, including the possibility of a full deduction for the cost, are detailed below.
Small businesses: see the $20,000 ($25,000 from 1 July 2019) threshold for accelerated small business depreciation claims and ATO Depreciation.
Self assessment of effective life
Taxpayers have the option of self-determining the effective life of a depreciating asset. The assessment takes into account the specific use circumstances of the asset, resulting in a calculated depreciation rate which could therefore differ from that based on the Commissioner’s determined effective life.
See the notes on Self-Assessment of Effective Life here.
Cost $300 or less – non-business taxpayer
Non-business taxpayers can claim a full deduction (i.e. 100% in year of purchase) if the mobile phone costs no more than $300. Where the cost is more than $300 then a depreciation formula must be used to calculate the percentage tax deductible amount.
Small Business – Instant Asset Write-off
Low-cost assets of taxpayers obtain full write-off for assets costing less than $1,000 (see low value pools).
The small business instant asset write-off concession allows a full deduction for the cost of assets below a (different) threshold.
The small business concession threshold has been adjusted in recent years.
Announced in the Budget 2019 – from 7:30 PM (AEDT) on 2 April 2019 (Budget night) until 30 June 2020 (subject to the passage of enabling legislation):
- The small business (turnover up to $10 million) write-off limit is increased from $25,000 to $30,000, applied on a per asset basis.
- Medium sized businesses (turnover from $10 million to $50 million) will now also have access to the instant asset write off in respect of assets acquired from Budget night to 30 June 2020.
- (As before) the small business pooling (simplified depreciation) rules and suspension of the lockout rules continue until 30 June 2020.
- [update Feb 2019] The availability of the instant asset immediate deduction is to be extended to 30 June 2020, with the ceiling lifted to $25,000 from 29 January 2019. See Treasury Laws Amendment (Increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019
- in the periods from 7.30 pm on 12 May 2015 the threshold is $20,000, increasing to $25,000 from 1 July 2019 (see extended cut-off dates)
- in the period 1 July 2012 to 31 December 2013 the threshold was $6,500
- for assets acquired at other times the threshold is $1,000.
Assets costing more than the low value pool write-off threshold ($1,000) can be pooled with a deduction rate of 18.75% in the first year of acquisition and 37.5% thereafter on a diminishing value basis.
Alternatively under the small business simplified depreciation rules which provide an instant asset write-off allowance (nominally $1,000 but increased to $20,000 – as detailed above) – assets in excess of the thresholds are pooled with a 15% deduction in the first year and 30% thereafter. Opening pool balances falling below the threshold are also deductible in full.
Phone provided by an employer
The value of a mobile phone provided by a employer falls for consideration under the FBT rules, and there is therefore no deduction for the employee.
However, certain work-related items, including mobile phones, which are primarily for use in the employee’s employment are exempt from FBT.
See further – FBT Exemptions checklist – Section 58X
This page was last modified 2019-04-02