The depreciation rate of a mobile phone based on the Commissioner’s effective life estimate of 3 years is
- 66.67% per annum on a diminishing value basis; or
- 33.33% per annum prime cost
The diminishing value and prime cost calculation methods are explained here.
Cost $300 or less – non-business taxpayer – full deduction
Subject to conditions, non-business taxpayers (i.e. employees) can claim a full deduction (i.e. 100% in year of purchase) if the mobile phone costs no more than $300. The non-work usage (as evidenced, for example, by a 4-week diary of typical usage) must be apportioned out of the claim.
There are 4 conditions which must be met to allow a non-business 100% deduction claim (instead of depreciation):
- the cost must be less than $300
- the asset is used for non-business purposes, e.g. work-related usage as an employee
- the asset is not part of a set costing more than $300
- the asset isn’t one of a number of identical or substantially identical assets that together cost more than $300
See more information about this claim method here (including examples of “sets” and “substantially identical” items).
Where the cost is more than $300 then the depreciation formula must be used to calculate the percentage tax deductible amount.
Small businesses: See the more generous instant asset deductions currently available under temporary measures for accelerated business depreciation claims and ATO Depreciation.
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 and computers see here.
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.
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.
Small Business Accelerated Depreciation and Instant Asset Write-off
For some years since 2013, small businesses have been able to claim depreciation through a Simplified method which allows a faster write-off than would be the case under the general depreciation rules.
In addition, since 2013 there have been several versions of “instant asset” deductions which enable outright deductions in the year of purchase for assets which cost below a certain amount.
The qualifying conditions and deduction allowances have frequently changed, and are being updated here: Instant Asset Write-off expanded and extended
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 as mentioned 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.
See small business depreciation
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
- Depreciation – computers
- Home Office Expenses
- Tax Deductions
- Small business instant asset deductions (temporary full expensing)
This page was last modified 2021-08-23