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Business income tax
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Claiming business expenses: Tracking expenses

Keeping track of expenses during the tax year

You pay income tax on your net profit for the year. To work out your net profit, deduct your business expenses from your income for that year.

What qualifies as a business expense?

You can claim a wide range of the expenses you incurred as a result of operating your business, provided you keep sufficient records of your purchases during the year.

Some commonly claimed expenses are:

  • Motor vehicle -- keep a logbook to record how much the motor vehicle is used for business, and how much for non-business purposes.
  • Use of your home for business -- you may claim a proportion of your rates, house insurance, power, and mortgage interest, based on the proportion of the area in your home that is set aside for business.
  • Rent, if you pay it for your business premises -- you may also claim power, phone and other expenses for these premises.
  • Business supplies -- eg, stationery and other office supplies, raw materials, stock purchases.
  • Business-related travel expenses -- record your travel details in a diary and keep invoices and tickets.
  • Premiums and levies -- for accident insurance and ACC cover.
  • Gross wages to employees
  • Fringe benefit tax
  • Entertainment expenses for entertaining staff and clients -- some expenses are 100% deductible while others are 50% deductible. See our booklet on entertainment expenses for more detail.

Fixed assets

You cannot claim the cost of fixed assets (ie, business assets that you expect to use for more than a year) as an expense against your income. Instead you claim depreciation on most fixed assets.