Claim business expenses NZ - Business kiwi Guide

There are many costs that come with running a business in New Zealand, and knowing what you can deduct from your taxes can have a big effect on your bottom line. A lot of business owners miss out on real deductions because they don’t know what they can claim or how to do it right.

This complete guide will teach you everything you need to know about claiming business expenses in New Zealand. We’ll go over all the important information you need to know to make the most of your tax deductions while still following IRD rules. This includes knowing what makes you eligible and keeping good records.

If you know how to correctly claim business expenses, you could save thousands of dollars a year, whether you’re a sole trader, a partnership, or a company. Let’s look into how New Zealand’s system for deducting business expenses works.

Comprehending Who Can Claim Business Expenses:

Requirements

Some people can’t claim business expenses on their taxes. You must be making money from business activities, either as a sole trader, partnership, or company, to be eligible. The most important thing is that all costs must be for business purposes only.

Types of Business Structures

Sole Traders: Can use the IR3 form to claim expenses directly on their own tax return. This is the easiest way to get business expenses back in New Zealand.

Partnerships: Each partner can get back their share of business costs based on the terms of their partnership agreement.

Companies: Companies can deduct their business expenses from their taxable income.

A full list of business expenses that can be deducted

Costs for the office and administration

The list of business costs in New Zealand includes a number of office-related costs:

Office supplies, like stationery and printing materials
Subscriptions and software for computers
Subscriptions and memberships for professionals
Bank charges and fees
Business assets’ insurance premiums
Fees for accounting and the law

Marketing and Advertising Costs

Creating and keeping up a website
Ads on social media
Brochures and ads in print
Business cards and promotional materials
Costs of being at a trade show

Tools and Technology

Computer hardware and peripherals
Phones and other communication tools for business
Business furniture
Tools and equipment that are specific to a task
Licenses and subscriptions for software

What You Can and Can’t Claim for Home Office Expenses

How to Figure Out Your Home Office Deductions

You can claim some of your household costs when you work from home. Some of the most common ways are:

The Floor Area Method: Find out what percentage of your home is used only for business, and then use that number to figure out what expenses are eligible.

Method Based on Time: If you use a room for both business and personal purposes, calculate the percentage of time it’s used for business.

Claimable Costs for the home office

Rent or mortgage interest (in proportion to the amount)
Electricity and heating
Rates for property (in proportion)
Home insurance (proportional)
Repairs and upkeep (in proportion)
Costs for the phone and the internet

What You Can’t Claim

Parts of any expense that are for personal use
Changes that make the property better
Paying back the principal on mortgages
Personal phone calls

Motor Vehicle Expenses: How to Get Money Back for Business Car Costs

Available Methods

Logbook Way: Keep detailed records of how much you use for business and how much you use for personal reasons. Take the business share of all car costs.

Kilometre Rate Method: For business travel, use IRD’s standard rates per kilometer. This method doesn’t need detailed records of expenses, but it does need accurate mileage logs.

Expenses for vehicles that can be claimed

Oil and fuel
Getting a license and registering
Insurance
Fixing things and keeping them in good shape
Depreciation Finance costs
Keeping track of vehicle claims

Keep accurate records that show

The reason for each business trip
Distance traveled
Date and place of arrival
Total kilometers driven each yea

Entertainment Expenses: Navigating the Rules

Rules for general entertainment

There are certain limits on how much you can spend on entertainment in New Zealand. Most of the time, you can only deduct 50% of your entertainment costs. Some types of costs aren’t deductible at all.

What Counts as Entertainment

Meals and hospitality for clients
Staff events and parties
Food and fun at the conference
Social events for work

Common Question: Can I Claim Gym Membership?

In general, you can’t deduct personal fitness costs, so the answer to “can I claim gym membership as a business expense NZ” is no. However, if you are a personal trainer or fitness professional who uses the gym for work, you may be able to claim some of the costs.

Costs of Travel: Making a claim for business trips

Traveling within the country

If you go to New Zealand for business, you can claim:

Costs for lodging
Food while traveling
Costs of getting around
Extra costs

International Travel:

The rules for international business travel are mostly the same, but there are extra paperwork requirements for IRD compliance.

Travel for More Than One Purpose

If you go on a trip for both business and pleasure, only the business part can be deducted. Careful record-keeping is essential to separate business from personal expenses.

Understanding Asset Depreciation: What It Is

What kinds of assets can lose value?

You can depreciate most business assets that will be useful for more than a year:

Equipment for the office
Computers and technology
Vehicles
Machinery and tools
Furniture and other things

Ways to Depreciate

Straight-Line Method: The asset loses the same amount of value each year over its useful life.

Diminishing Value Method: More depreciation in the first few years, then less over time.

Assets with a low value

You can usually fully deduct assets that cost less than $1,000 in the year you buy them, which makes it easier to claim.

Keeping Records Requirements and Best Ways to Do Things

Important Paperwork

To claim business expenses, you need to keep good records. You need to keep:

Original receipts and invoices
Records of bank statements and credit cards
Vehicle expense logbooks
Contracts and deals
Proof of payment

Managing digital records

Digital record-keeping systems are good for businesses today:

Accounting software that runs in the cloud
Apps for scanning receipts
Tools for keeping track of digital expenses
Integration of automated bank feeds

Timeframes for keeping

You should keep business records for at least seven years after the end of the income year they are for. This makes sure that the IRD’s rules are followed and gives you protection during audits.

Things You Shouldn’t Do When Claiming Expenses

Expenses for personal use vs. business use

The most common mistake is to try to write off personal expenses as business expenses. Ensure expenses are genuinely incurred for business purposes.

Not enough paperwork

Claims can be denied if you don’t have receipts or good records. Maintain comprehensive documentation for all claimed expenses.

Wrong Distribution

When costs are for both business and personal reasons, make sure you get the business part right..

Problems with timing

When you claim expenses, make sure to do so in the right income year, which is when they happened, not when you paid them.

Using calculators and other online tools

How to Make a Claim for Business Expenses in New Zealand Online

You can file your taxes and claim expenses online using the IRD’s myIR system. This digital platform makes the process easier and lets you know right away that your submissions have been received.

Calculators for Business Expenses

There are a number of online calculators that can help you figure out how much you can claim for

home office expenses.
Costs of vehicles
Calculating depreciation
Allowances for travel

These tools provide estimates but shouldn’t replace professional advice for complex situations.

What costs can I deduct from my personal taxes?

Sole Traders and Personal Tax Returns

Sole traders can use the IR3 form to claim business expenses directly on their personal tax returns. This includes all legal business costs that were incurred during the income year.

Expenses Related to Work

Compared to business owners, employees can only claim a few expenses. In general, employers should give their workers the tools and equipment they need.

Things to think about in your field

Services for Professionals

Lawyers, accountants, and consultants often have certain types of expenses:

Courses for professional growth
Industry publications
Insurance for professionals
Entertaining clients (with some restrictions)

Building and trades

People who work in trades and construction usually say:

Tools and gear
Costs of owning a car
Safety equipment
Materials and supplies

Retail and Hospitality

Businesses in the hospitality and retail sectors focus on:

Businesses in the hospitality and retail sectors focus on:
Stock and inventory Point-of-sale systems
Uniforms for staff
Taking care of equipment

Getting the Most Out of Your Business Expense Claims

Reviews of Expenses on a Regular Basis

Check your expenses every three months to find new things you can claim and make sure you don’t miss anything.

Growth in your career

Investing in professional development is often fully tax-deductible and can help your business in the long run.

Upgrades to technology

Most of the time, you can deduct the cost of modern technology, which can help your business run more smoothly

Timing for Strategy

Think about when you make big purchases to get the most tax benefits over different income years.

Getting Help from Professionals

When to Get Help from a Professional

If your business structure is complicated, you’re buying a lot of assets, or your expense categories aren’t clear, you should get professional help. Tax advisors can help you make the most of your claims while making sure you follow the rules.

Advantages of Getting Help from a Professional

Maximized deductions
Compliance assurance
Planning taxes in a smart way
Saving time
Protection from audits

Take charge of your business costs right now

Knowing how to properly claim business expenses in New Zealand can have a big effect on the financial health of your business. Every legal deduction, from the cost of your home office to the cost of your car, helps your bottom line.

Keeping accurate records, knowing what the IRD wants, and staying up to date on what deductions are allowed are all important for successfully claiming expenses. This guide has a lot of useful information, but every business is different.

Our team at Business Kiwi has a lot of experience helping New Zealand businesses get the most out of their tax deductions while still following all the rules set by the IRD. We know that filing business expense claims can be complicated, so we can give you personalized advice based on your specific situation.

Don’t let not knowing stop you from claiming real business costs. Call Business Kiwi today to set up a meeting to make sure you’re getting all the deductions you’re entitled to while staying within the law. We can help you turn managing your expenses from a compliance headache into a strategic advantage for the growth of your business.