Is a cellphone allowance taxed?
The short answer is yes. Allowances are fully taxable.
But if you are using your cellphone for company business or the company’s cellphone for your private calls, the tax implications change.
There’s a Draft Interpretation Note that explains all this.
Here is a summary –
1) Your company provides you with a phone/tablet/contract and allows you to use it for personal matters as well as for business.
- If the asset is used mainly for business, then there is no tax payable for this benefit. “Mainly” means more than 50% but this is pretty subjective, because it would include incoming as well as outgoing calls, Whatsapp, email, Internet searches etc.
- If the above is not the case then there is a formula for calculating the taxable fringe benefit.
2) You use your own device/service partly for company business. Your employer re-imburses you for its share of the costs.
- The re-imburseement is not taxable income.
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