The general rule is simple and strict: you can claim expenses incurred in earning your assessable income, to the extent they’re business — not private. Records and apportionment are everything. The grey areas that cost people are home office, motor vehicle, and anything with a private slice, where the claim is only the business portion and only with evidence.
What it depends on
Where judgement stays human: Where the private/business line falls, and whether something is capital or expense, is judgement applied to your facts — the part worth getting right before, not after, the ATO asks.
Most disputes aren’t about whether something is deductible in principle — they’re about apportionment and substantiation. A phone used for work and life is deductible for the work share, but only if you can show how you worked out that share. “It’s all for the business” rarely survives scrutiny.
The other trap is capital versus expense: a tool you use up is an immediate deduction, but an asset with a life gets written off over time (subject to the current small-business rules). Getting that split wrong changes your tax in both directions.
Where the private/business line falls, and whether something is capital or expense, is judgement applied to your facts — the part worth getting right before, not after, the ATO asks.
No question is silly, and there's no judgement about where things are at. Tell us what is different about your situation and a CPA will reply personally — usually within one business day.
Reviewed by Graham Chee FCPA (TPB registered tax agent, RAN 15375009) on 1 September 2026.
Sydney Accountants · general information current as at 1 September 2026. This is general information only, not personal financial, tax or legal advice.