Separating business and personal creator expenses

Separate creator expenses by recording what each purchase supported and the portion used for business. A dedicated account makes income and expenses easier to track, but paying from a business account does not by itself make a purchase deductible.

The ATO says most business expenses can be claimed when they relate directly to earning income, are for business rather than private use, and are substantiated by records. For a mixed-use expense, you can claim only the portion used for business.

Classify the purchase by its use

For each cost, note the work it supported. A subscription used solely for a paid client project is easier to explain than a phone, camera or internet service used for both work and private life. Showing a privately purchased item in content does not, by itself, establish that its cost is deductible.

Assess the actual business use and the relevant expense rules; do not apply one convenient percentage to every bill or assume a business-account payment makes the whole purchase deductible. If you are unsure what you can claim, contact your accountant, a business adviser or the ATO, particularly about assets and home costs.

Document mixed use

Keep the original amount and a separate proposed business portion. Record the period, the work or activity involved, how private use was considered and how you calculated the split. Revisit the basis if the pattern changes.

For example, one internet connection may serve client uploads, publishing and household activity. Keep the bill and a written note explaining the business use for the relevant period; do not use a percentage you cannot support.

If you claim a deduction, the ATO requires records that substantiate it and explain the transaction. Records must be in writing, on paper or electronically, and in English or in a form that can be readily accessed and converted into English; keep them for five years, although some records must be kept longer.

ATO record-keeping requirements for Australian creators

Keep banking and classification separate

A sole trader does not have to have a separate business bank account, but business.gov.au recommends one. A partnership, company or trust must have a separate bank account for tax purposes. If you are unsure of your structure, ABN Lookup can search by personal name, business name or ABN.

If you use one account for personal and business banking, clearly identify personal payments and expenses in your cash book. Keep the source document for business purchases, including those paid personally. If you are registered for GST, keep GST records; separately recorded transactions can also make activity statements and tax returns easier to prepare.

Classify transfers between your own accounts as transfers, not new sales or expenses. Money taken for private use needs treatment appropriate to the business structure; ask an accountant about an unfamiliar case.

Clean up a mixed account

Review a defined period and mark transactions as business, private, mixed or unresolved. Attach records to business and mixed items, note the basis for each proposed split, and leave uncertain entries visible for professional review.

Maintain the classifications as transactions occur so each claimed amount can be traced from its original record to the calculation.