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Business expenses: What can you claim for?

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.

What counts as an expense

The more expenses you can claim, the less tax you’ll pay. Business expenses can include:

  • vehicle expenses, transport costs and travel for business purposes
  • rent paid on business premises — including your home
  • 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.

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.

Tool for Business downloads: Vehicle logbook template (external link) — Inland Revenue

How much you can claim

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.

Getting a tax agent or accountant to complete your GST and income tax returns may end up saving you money.

Getting a tax agent or accountant to complete your GST and income tax returns may end up saving you money.

They know all the things you can claim for.

Working from home

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:

  • rates 
  • power 
  • house and contents insurance 
  • mortgage interest if you own the home
  • rent if you are renting the home.

You must keep invoices for these expenses.

How it works

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.

GST

Keep track of receipts and invoices by stapling them to your monthly bank statement before filing it.

Keep track of receipts and invoices by stapling them to your monthly bank statement before filing it.

If you keep digital records, photograph your receipts and keep them with your other records — but you should keep the paper copies, too.

Keeping tax records

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:

  • invoices
  • receipts 
  • wage books
  • petty cash
  • banking records
  • vehicle logbooks
  • asset registers and depreciation schedules
  • emails, eg arranging business meetings — especially if you're claiming for travel expenses to another city or overseas.
Quiz

Claiming expenses

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