Tax and SARS knowledge base
How do I split business and personal costs?
How do I split cellphone, internet, fuel and rent costs between business and personal use?
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Direct answer
Split mixed costs using a reasonable method that reflects actual business use, retain the source documents and workings, and exclude the personal portion. SARS's current ITR12 guide says that personal portions of dual-purpose expenditure are not deductible business expenditure. It also says that no single allocation rule can be prescribed and that full calculation details must be retained for five years after the return is submitted.
The best method depends on the cost. A business-use measure that makes sense for cellphone data might not make sense for fuel or rent. Use evidence, apply the method consistently for the relevant period, and review it if the facts change.
What this means in practice
Begin by separating costs that are wholly business, wholly private and genuinely mixed. A dedicated business phone line or a supplier invoice for a customer project may have clear evidence. A family internet contract, private vehicle or home rental bill is more likely to need an allocation. Do not claim the whole household bill merely because some business work happens at home.
For cellphone and internet, retain invoices and select a measure that can be supported by actual use, such as a documented usage analysis, separate work line, device records or a reasonable period-specific calculation. Avoid selecting a convenient percentage without reviewing the underlying facts. For fuel, retain the relevant invoices and objective business travel evidence, including a contemporaneous logbook where travel rules require one. A broad statement that "most trips were business" is not a calculation.
For rent and premises costs, first decide whether the premises use supports any deduction at all. SARS has separate home-office guidance. It says a home office must be regularly and exclusively used for trade and specifically equipped for that purpose, and it explains floor-area and period apportionment for qualifying premises costs. A mixed family room may fail the exclusive-use requirement, so a percentage calculation cannot cure an ineligible claim.
Create one allocation sheet per category. State the total cost, period, evidence, business-use measure, calculation, business portion and private portion. Keep it with invoices and bank records. If business use changes because a new client, vehicle, room or mobile contract starts, update the schedule from that date instead of applying the earlier percentage to the full year.
Step-by-step
- Classify the cost.
Mark each amount as business-only, private-only or mixed. Keep the original bill and payment proof.
- Choose an evidence-based measure.
Use records that relate to the type of expense, such as usage information, work logs, mileage records, floor area or actual dates of use.
- Calculate the business component.
Show total amount multiplied by the supported business-use ratio. Record the private component explicitly.
- Check special categories.
Apply the separate current rules for travel and home-office claims. Do not assume ordinary mixed-expense treatment is enough.
- Reconcile to the ledger.
Ensure the claimed amount matches the allocation sheet and financial statements, not the full bank debit.
- Retain the proof.
Keep bills, logs, floor plans, calculations and submitted return for at least the required period.
Documents and records to keep
- Itemised cellphone and internet bills, contracts and use records.
- Fuel receipts, vehicle records, travel logs and customer appointment evidence.
- Lease, rates, utilities, floor plan and home-office calculations where relevant.
- Bank statements and ledger reconciliations.
- The allocation sheets, ITR12 and SARS assessment.
Important limits and exceptions
This article does not supply fixed percentages or decide whether a specific cost is deductible. A reasonable allocation must be defensible on the actual facts. Personal use is not deductible business expenditure, and a home-office claim has additional qualification requirements.
Do not copy a colleague's percentage, round up a calculation without evidence, or use a household invoice as if it is entirely a trade expense. If evidence is thin, claim only what you can substantiate or obtain advice before filing.
When to get tailored advice
Get advice for a material vehicle claim, business premises, multiple trades, a shared family home, irregular travel or a disputed allocation. TaxProof can build and reconcile the support schedules.