Private use and business percentage: how to apportion mixed expenses
Almost nothing a sole trader buys is purely business. The car does school drop-off, the phone takes personal calls, the laptop streams the cricket. The ATO does not expect you to buy two of everything; it expects you to claim the business share and to be able to show how you worked it out. This guide covers the methods for the common mixed expenses and what happens when the split is wrong.
Updated 16 September 2026. General information only, not tax advice.
The principle
A deduction is allowed to the extent an expense is incurred in earning assessable income. Where an expense serves both business and private purposes, you apportion it. The ATO asks for a method that is reasonable in the circumstances and for records that support it. Reasonable means based on actual use, not a round number chosen because it sounds modest; 50% with no evidence is not safer than 73% with a diary.
Cars
The clearest rules. Under the logbook method, a 12-week logbook establishes the business percentage of kilometres, and that percentage applies to every car cost for up to five years. Under the cents-per-kilometre method, you claim only the business kilometres (capped at 5,000) and the rate covers everything, so no separate apportionment is needed. Vehicles over one tonne are not cars and are claimed on actual costs at a business percentage supported by a diary or logbook.
Phone and internet
Keep a record of business and private use for a representative four-week period each year: calls, texts and data for the phone, time or data for the internet. Apply the resulting percentage to the year’s bills. If the phone is used only for business (a second handset, say) it is 100%. If you claim working from home under the fixed rate method, phone and internet are already included in the rate and cannot be claimed separately. See phone and internet deductions.
Computers, tablets and equipment
Estimate the business share of use over a typical week, and keep a note of how you arrived at it. A laptop used five days for client work and evenings for personal use might be 70%. Apply that percentage to the cost when you write it off or depreciate it, and to repairs and accessories. A device bought for a specific business purpose and rarely used otherwise can be close to 100%. See tools and equipment deductions for the write-off rules.
Home costs
Running costs (power, internet, phone, consumables) are claimed under the fixed rate per hour or the actual cost method, both of which require a record of hours worked from home. For the actual cost method, energy is usually apportioned by floor area of the work space and hours of use. Occupancy costs (rent, mortgage interest, rates) are only claimable if your home is a place of business, and then by floor area. See home office deductions.
Subscriptions, memberships and other mixed items
Software used for both (a cloud storage plan holding client files and family photos), a streaming music subscription played in the salon and at home, a gym membership for a personal trainer, a magazine subscription: apportion each on a reasonable basis and write the basis down. Some items are wholly private even if they help you work: ordinary clothing, meals during the day, the commute. The ATO’s deductions guide lists the usual suspects.
GST follows the same percentage
If you are registered for GST, you claim the business percentage of the GST on a mixed purchase at label 1B. A $1,100 phone at 60% business use gives a $60 GST credit, not $100. For larger purchases, if the business use changes materially in later years the ATO can require an adjustment to the GST originally claimed; this applies to items over $1,000 and is worth a word with your accountant when you buy a car or expensive equipment.
When the split is wrong
Over-claiming private use is one of the most common findings in ATO reviews of small business, and the usual reason is no record at all rather than a bad method. A four-week diary once a year, a logbook every five years, and a one-line note on each equipment purchase is enough. FlowFi lets you set a business percentage per category or per transaction, so once you have decided that the phone is 60%, every bill applies it to both the deduction and the GST credit without you thinking about it again.
Email me the quarterly BAS checklist
The checklist now, then a few short notes on getting your BAS done. No spam, unsubscribe any time.
Frequently asked questions
Can I just claim 50% of everything to be safe?
No. The percentage has to reflect actual use. A flat 50% with no support is as exposed as 100%, and often costs you deductions you were entitled to.
Does a family member using my business laptop change the percentage?
Yes. All private use counts, whoever is doing it. Estimate the total private use and claim the remainder.
How long do I have to keep the usage records?
Five years from the date you lodge the return that relies on them. A car logbook is valid for five years unless your pattern of use changes.
General information only, not tax advice. Check your own situation with a registered tax agent or the ATO.
Set the business percentage once, apply it every month
FlowFi applies your business-use percentage to the deduction and the GST credit on every matching transaction.
Start 14-day free trial14 days of Pro free. No credit card. Then $29 a month or $290 a year.