All self-employed people can claim business expenses, contractors and sole traders included. If you work from home you can claim some household expenses, as well. Make sure you’re not missing a trick at tax time — find out what counts as an expense.
The more expenses you can claim, the less tax you’ll pay. Business expenses can include:
If you use a vehicle for work, it's a good idea to use Inland Revenue's vehicle logbook template — download this spreadsheet from the Tool for Business website.
If you use something solely for business, you can usually claim the whole cost of the item. But there are exceptions. You can only claim half of some entertainment expenses, eg client coffees or meals.
Entertainment expenses (external link) — Inland Revenue
If you have an expense that’s partly for business and partly for private use, you can claim the proportion that relates to your business.
So if you have a work van you use half for business and half for your own reasons, you can only claim for 50 per cent of the van’s running costs.
Items that cost $500 or more must usually be depreciated.
They know all the things you can claim for.
When you use an area of your home for your business, eg your study or garage, you can claim a portion of the household expenses, eg:
You must keep invoices for these expenses.
If your home is 100 square metres and you use 10 square metres for work — so 10 per cent of the total area — you can claim 10 per cent of expenses like rent, power — and even toilet rolls.
If you aren't using a separate area of your home for business, you'll need to take into account how much time you spend on your business and how much space you use.
If you're GST registered, the GST content on home office expenses can be claimed as they’re paid — in each GST return period — or at the end of your tax year. Mortgage interest and rent don’t include GST.
Check out this visual guide for more information on what you can claim for when you work from home.
If you keep digital records, photograph your receipts and keep them with your other records — but you should keep the paper copies, too.
Staying on top of paperwork and filing makes life a whole lot easier when filling in your GST and tax returns. Online software and apps can help — some you can download for free.
Remember to separate personal and business receipts and to keep invoices and receipts for seven years.
You’ll need to keep: