[Question] Business paying for Cell Phone in Owner Name

[GlitchFreak]

Hey everyone

Glad to see the forum is going strong.

My question refers to me paying for my cell phone account personally but the majority of calls are made for business. Its just under R900 every month. Can I claim the account from my business even if the account is in my name?

Kind regards

[Dave A]

Yes you can.

However, the business can't claim the VAT portion as an input tax (if the business is VAT registered). I'd also recommend that you make it in the form of a claim against the business for expenses actually incurred rather than in the form of a cellphone allowance.

Frankly, it is better to have a cellphone in the business's name (and use it strictly for business mutter mumble..)

[GlitchFreak]

Thanks Dave.

When the contract expires in a few months I'll opt to change it to the business.

I'm not VAT registered (yet) and I'll claim it as a capital investment.

Thanks for the advice!!

[Morticia]

Business cellphone

Keep in mind that, per current legislation, technically a taxable fringe benefit arises in your personal name i.r.o. private use of an asset (if the phone is registered in the business' name).

Good news though, draft legislation to Income Tax Act proposes no taxable fringe benefit as the administrative costs to employers to calculate this benefit does not justify the actual amount collected.

[Dave A]

I think trying to seperate private from business calls is a tricky deal whether you're dealing with a claim or the phone is in the business's name. We encourage that people have a business phone and their own, personal phone for private calls - and this has been accepted quite happily.

What I did was analyse call records and determine a reasonable business use. From there, I applied a budget and the employee was responsible for costs over budget. If they want the budget increased, they have to sit down with me and justify the increase.

It works very well in preventing abuse. I think staff prefer it to me scrutinising their call lists the whole time, and they think twice before suggesting that the budget isn't high enough.