February 15, 2022
Why Are The Canadian & Global Tax Authorities So Focused On Tax Consequences Of Cellphones
Why Are The Canadian & Global Tax Authorities So Focused On Tax Consequences Of Cellphones
Very simply the vast majority of usage is personal and they know it.
For those that remember getting a company provided car (weren’t those the good old days) you will remember the need to have a mileage book denoting the personal usage of the company automobile, so that your employer could calculate the taxable benefit attribution.
The same is true for cellphones and has been the case for quite sometime.
Have you ever been able to say to a tax authority – “I have a personal automobile that I use for personal trips, and therefore do not need to have a mileage book denoting the personal usage of the company car?” How about “I have a work phone so I don’t use my work phone for personal, because I carry two phones.”
Neither will work with the tax authorities, as you have to prove that there is no personal usage and back it up, and it’s why they ask you to keep a mileage book for both automobile and cellphone denoting the business and personal.
You are thinking how can the tax authorities ask you to prove a negative (no usage)? The answer is that by proving the business usage you prove the personal usage; so if the mileage book that you provide for business is 100% of the mileage than clearly there is no personal usage.
The same is true for cellphones. You’ll have to prove that there was no personal calls, personal smses, or personal data usage on the corporate provided phone… How do you do that? By proving that all calls were business, all smses were business and all data usage was business.
Who reading this with a straight face will say “I don’t use the company provided phone for personal purposes.”
What is interesting is the increased enforcement we are seeing.
You’ll see here that Canada’s #1 Tax Journalist who writes for the Canadian version of the FT/WSJ and who writes on tax and need to have receipts all the time… He provided documentation to support his Internet and Mobile tax deduction and the Canadian tax authorities rejected 100% of it due to the failure to meet documentation and substantiation requirements (the detailed business usage per the above.)
Do you think your local authority doesn’t know what is going on in terms of connectivity?
App Annie (https://www.appannie.com/en/go/state-of-mobile-2022/) just reported the following :
- The average North American spends 3.4 hours watching TV
- The average North Americans spends 4.8 hours using Apps
Do you seriously think the 4.8 hours / day (data usage) is 100% business?
We say to any customers and partner – We’ve never done a trial/customer deployment where less than 70% of the usage and cost is personal.
We ALWAYS are conservative to actual results….
And this is the reason why you need to be using mobilityView solutions even if your employer provides you a Smartphone and Plan.
You are personally on the hook for the taxable benefit and the accuracy of your tax return. If it turns out the tax authorities do an audit of your employer, and the employer failed to account for the taxable benefit … you the employee are on the hook for the interest, penalties, and the refund.
We know from talking to a number of employers that they have been caught on this issue, not just on cellphones but on other matters as well…Protect yourself by using @mobilityView Time Machine for previous years to document the business usage (and get a tax deduction if you forgot to claim the business usage or claimed to little) and then use #MobileCostManagement in 2022 to keep yourself audit proof and get a deduction.If you are in B2B Telco or SaaS sales, please do reach out as we have a fantastically lucrative Ambassador program that will have you earn more than your current Variable Compensation just for making an introduction.
30 Second Explainer Videos Of What We Do :
Go Back In Time & Get More Tax Deductions As A Gig Worker/WFH Employee/Contractor For Years Where You Claimed Too Little Or Nothing At All : https://lnkd.in/ekw6Kphm
US Gig Workers : https://lnkd.in/gVA8g9Xr
Canadian Gig Workers : https://lnkd.in/gS7isHgh
Australian Gig Workers : https://lnkd.in/geT95ZTM
Employee reimbursement : https://lnkd.in/gV_xgax
Employer cost savings : https://lnkd.in/ggHFZaE
Employee & Gig Worker tax deduction : https://lnkd.in/gD5eEke
Smartphone global tax trends : https://lnkd.in/gzFkRae
Free trial for anyone that wants to see what Mobile Cost Management can do for you (Promo Code : LI-04) - https://www.mobilityview.com/contact/direct-trial
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