Tax Deductions NZ Business Owners Commonly Miss
Most NZ business owners are leaving money on the table at tax time — not through anything complicated, but simply by not claiming deductions they're legitimately entitled to.
The key is knowing what's claimable and keeping the records to support it.
Home office expenses
If you use part of your home for business purposes, you can claim a portion of your home running costs as a business expense. This includes:
- Rent or mortgage interest
- Rates
- Power and gas
- Internet and phone (the business-use portion)
- Insurance
The portion you can claim is based on the floor area used for business as a percentage of total floor area. You need to be able to demonstrate the space is used primarily for business — a dedicated office is clearer than a kitchen table.
Vehicle expenses
If you use a vehicle for business purposes, you can claim the business-use portion of running costs — fuel, insurance, registration, repairs, and depreciation.
The two main methods are:
Logbook method: Keep a logbook for 90 days to establish your business-use percentage, then apply that percentage to your total vehicle costs for the year. The logbook needs to be updated every three years.
Kilometre rate method: Claim a set rate per kilometre for business travel. IRD publishes the rates annually. This is simpler but may result in a lower claim if you have high vehicle costs.
Professional development and training
Costs directly related to maintaining or improving skills used in your current business are deductible. This includes courses, conferences, professional memberships, and relevant books or subscriptions.
The key test is whether the training relates to your current income-earning activity — training for a new career or business is generally not deductible.
Software and subscriptions
Business software subscriptions — accounting software, project management tools, industry-specific platforms — are deductible. So are professional journals, industry publications, and relevant online subscriptions.
Keep records of what each subscription is for and how it's used in the business.
Bank fees and interest
Bank fees on business accounts are deductible. Interest on business borrowing — loans used to fund business assets or working capital — is also deductible, subject to the interest limitation rules that apply to residential property investment.
Equipment and assets
Small asset purchases (under $1,000 excluding GST) can be written off immediately rather than depreciated over time. For larger assets, depreciation is claimed over the asset's useful life.
Timing asset purchases before or after year end can affect which year the deduction falls in — worth considering if your income is significantly different between years.
The records requirement
IRD requires you to keep records for seven years. For most deductions, you need:
- A GST invoice (for purchases over $50 from GST-registered suppliers)
- Evidence the expense was for business purposes
- For home office and vehicle, a calculation showing the business-use percentage
The records need to be kept at the time of the expense — reconstructing them at year end is harder and less reliable.
Making sure nothing gets missed
At Eastmure & Associates, we review deductions as part of our year-round service — not just at year end. That means checking your expense categories regularly and flagging anything that should be captured before the records are lost.
Book a free 30-minute call to talk through what you might be missing.
