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Claiming expenses

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. 

Getting a tax agent or accountant to complete your return may end up saving you money.

Getting a tax agent or accountant to complete your return may end up saving you money.

They know all the things you can claim for.

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.

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
  • work-related mobile phones and phone bills
  • stationery
  • work uniforms
  • tax agent’s fees.

If you work from home, you can also claim for part of many of your household expenses — like mortgage interest, your phone line and your electricity bills. See Inland Revenue for more information about using your home for business (external link) .

You can't claim 100% of the cost for all items, even those exclusively for business use — some things you can only claim half for, eg some entertainment expenses. Inland Revenue has a booklet on entertainment expenses (external link) .

Watch Inland Revenue’s animation explaining business expenses.

Video transcript (external link)

If you run a business from your home, can you claim the full amount of household bills, eg broadband and power, as work expenses?

You should pay for as many of your work-related expenses as possible through your business account.

You should pay for as many of your work-related expenses as possible through your business account.

This means you’ll have a paper (or electronic) trail at claims time. If you use accounting software, everything will be coded and added up automatically.

How to claim expenses

You claim your business expenses annually in your tax return. You'll need to know the total amount for each type of expense you're claiming, and enter it into the relevant box on the form.

If you use accounting software, most of it will be done for you — you'll just need to keep your receipts to back up your electronic files.

You don't need to provide your receipts with your return — but you need to keep them somewhere well organised and easy to find for at least seven years, in case Inland Revenue asks to see them.

An easy way to keep track of your receipts and invoices is to group them monthly, and staple each month's receipts to your monthly bank statement before filing them.

An easy way to keep track of your receipts and invoices is to group them monthly, and staple each month's receipts to your monthly bank statement before filing them.

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

Keeping good records makes doing your tax return and claiming expenses much easier.

Records you may need to keep include:

  • receipts for all claims — including statements and GST tax invoices
  • interest statements
  • summaries of earnings for each employee
  • dividend statements
  • a record of rental income and expenses
  • purchase and sale agreements (for disposal of investment assets).
You must keep your records for seven years.

You must keep your records for seven years.

These must be in English, unless you get approval from Inland Revenue to use another language.

Common mistakes

Avoid these common pitfalls when claiming expenses:

  • Not separating your business and personal receipts — you need to know which ones to claim against your business tax return and your personal tax return (unless you're a sole trader).
  • Disposing of your receipts or invoices too soon — you must keep them for seven years.
  • Not knowing what you can claim for.

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