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01 April 2025
By ITM
To help reduce your tax bill, you can offset many of your business expenses against your business income. You'll need to keep good records and hold on to your receipts.
What are expenses?
Expenses are the costs you incur in the day-to-day running of your business. At tax time, your total profit (the amount you need to pay tax on) is your taxable income minus the expenses you can claim — so the more you can claim, the less tax you have to pay.
Business expenses are:
expenses over time.
GST
If you're registered for GST, your income tax return will exclude GST on your income and expenses — GST is accounted for in your GST return.
If you're not registered for GST, your income tax return will include GST on your expenses only.
What you can claim for
Business expenses can include:
It's easy to let filing and paperwork slip. But keeping good records makes it much easier to do your tax return — and will save you time in the long run.
You must keep your tax records for seven years. These must be in English unless you get approval from Inland Revenue to use another language.
What are expenses?
Expenses are the costs you incur in the day-to-day running of your business. At tax time, your total profit (the amount you need to pay tax on) is your taxable income minus the expenses you can claim — so the more you can claim, the less tax you have to pay.
Business expenses are:
- Day-to-day revenue expenses for running your business, e.g. advertising or wages.
- Assets you buy, e.g. machinery, computers or tools, which are called capital expenses. Note: items that cost $1000 or more must usually be depreciated.
expenses over time.
GST
If you're registered for GST, your income tax return will exclude GST on your income and expenses — GST is accounted for in your GST return.
If you're not registered for GST, your income tax return will include GST on your expenses only.
What you can claim for
Business expenses can include:
- vehicle expenses, transport costs and travel for
- business purposes
- rent paid on business premises
- depreciation on items like computers and office
- furniture
- interest on borrowing money for the business
- some insurance premiums
- work-related journals and magazines
- membership of professional associations
- home office expenses
- work-related mobile phones and phone bills
- stationery
- work uniforms
- tax agent's fees.
How much can you claim?
You can't claim the whole cost of all items, even those only for business use. Some things you can only claim half of, e.g. some entertainment expenses. You can only claim 100% of the cost for an expense that's entirely for business use.
If you have an expense that's partly for your business and partly for your private use, you can claim the proportion that relates to your business.
For some expenses, like business entertainment,
e.g. client meals and staff functions, you can only claim half.
Working from home
If you use an area of your home for your business, e.g. your study or garage, you can claim a portion of the household expenses.
How to claim expenses
Whether you're a contractor, sole trader or running a business, you claim your business expenses annually in your tax return. Deduct expenses from what you've earned from your business during the year.
To claim an expense, you must have a record of that expense, e.g. a receipt, or Inland Revenue may not allow the expense to be claimed.
At the end of the year your business accounts will need to be completed, totalling up all your income and expenses. When you file your tax return, you'll either copy your income and expenses into your financial statements summary (IR10) or send Inland Revenue a summary of your accounts.
An accountant, bookkeeper, or accounting software can help you correct your annual return and claim the correct expenses.
Keeping recordsYou can't claim the whole cost of all items, even those only for business use. Some things you can only claim half of, e.g. some entertainment expenses. You can only claim 100% of the cost for an expense that's entirely for business use.
If you have an expense that's partly for your business and partly for your private use, you can claim the proportion that relates to your business.
For some expenses, like business entertainment,
e.g. client meals and staff functions, you can only claim half.
Working from home
If you use an area of your home for your business, e.g. your study or garage, you can claim a portion of the household expenses.
How to claim expenses
Whether you're a contractor, sole trader or running a business, you claim your business expenses annually in your tax return. Deduct expenses from what you've earned from your business during the year.
To claim an expense, you must have a record of that expense, e.g. a receipt, or Inland Revenue may not allow the expense to be claimed.
At the end of the year your business accounts will need to be completed, totalling up all your income and expenses. When you file your tax return, you'll either copy your income and expenses into your financial statements summary (IR10) or send Inland Revenue a summary of your accounts.
An accountant, bookkeeper, or accounting software can help you correct your annual return and claim the correct expenses.
It's easy to let filing and paperwork slip. But keeping good records makes it much easier to do your tax return — and will save you time in the long run.
You must keep your tax records for seven years. These must be in English unless you get approval from Inland Revenue to use another language.