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 $30,000 threshold for accelerated small business depreciation claims and ATO Depreciation. On 12 March 2020 the government announced a further increase in the write off threshold from $30,000 to $150,000 and to include businesses with aggregated annual turnover of up to $500 million (previously $50 million) until 30 June 2020.
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 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 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 2020-04-03