Claiming personal tax deductible expenses doesn’t have to be difficult. But knowing which expenses you can claim can sometimes be a bit of headache. So to help you make a confident choice we’ve put together a complete list of Solo’s expense categories with a short description for each that includes the relevant tax rules.
Business expenses often have specific rules that need to be applied to them. E.g rent doesn’t include GST. As you’ve probably noticed the IRD doesn’t provide a lot of in-depth information when it comes to personal tax deductible expenses. As a result it can be difficult to know which expenses you can claim and the specific rules that need to be applied.
Below you’ll find a detailed range of business expense categories. Each category has been specifically designed to match the New Zealand tax system and the needs of self-employed New Zealanders. To make claiming expenses simple we’ve included the relevant tax rules directly into Solo’s calculations. Simply select the appropriate category and Solo will do the math.
To maximise your tax savings be sure to categorise all your business expenses since the beginning of the financial year (April 1st).
Home Office Expenses
If you use an area of your home for your business, such as your home office, garage or a workshop, you can claim a portion of the household expenses and reduce your tax bill. How much you can claim of each expense depends on the portion of the home you use for work. E.g if your home is 100 square metres and your working space is 10 square metres — 10% of the total area — you can claim 10% of expenses.
For more detailed information check out our complete guide to claiming home office expenses.
When you setup Solo simply enter what percentage of your home is used for business and Solo will do the math so you’re always claiming the correct amount.
Rent – Rent you’ve paid to live at the property. Rent does not include GST.
Power/Gas – Power or gas bill for the property.
Internet & Phone – Internet or landline for the property or your mobile phone bill. Internet and phone is claimed at a standard rate of 50%. If you have a phone that is only used for business you can claim 100% of the cost by using the ‘General Expense’ category. Business related toll calls are also 100% claimable.
Water Utility – Water utility bill for the property.
Home Insurance – House or contents insurance for the property.
Cleaner – Commercial cleaning fees or cleaning products for the property. You cannot claim for your time if you are doing the cleaning yourself.
Security – Security/alarm system installation or monitoring. You cannot claim the cost of the alarm system itself.
Rates – Council rates on your property if you own the home.
Mortgage Interest – Mortgage interest only, and not the principal portion of your repayments. Mortgage interest does not include GST.
Repairs & Maintenance – Commercial labour or material costs to repair and maintain the property. You cannot claim for your time if you are doing the work yourself. And you cannot claim any alterations that add value to the property, such as adding an extension.
Business Vehicle Expenses
If you use your own vehicle for business, you can claim part of the running costs and reduce your tax bill. You can claim up to 25% before you need to keep a logbook. To claim over 25% you need to keep a logbook for 3 months every 3 years. If you use your vehicle only for business you can claim 100% of the costs. Travel between home and work is not considered business use.
For more detailed information check out our complete guide to claiming vehicle expenses.
When you setup Solo simply enter the percentage of your vehicle use that is for business and Solo will do the math so you’re automatically claiming the correct amount.
Fuel – Fuel for your business related vehicle.
Registration & WOF – Vehicle registration or warrant of fitness fees.
Maintenance & Tyres – Commercial labour or material costs to maintain your vehicle. If you’re doing the maintenance yourself, you can’t claim for your labour.
Parking & Tolls – Parking or tolls related to a work trip. But you can’t claim fines or tickets.
Car Insurance – Insurance on your work related vehicle.
Road User Charges – Road user charges for your work related vehicle.
General Business Expenses
All of the general expense categories below are claimed at 100%. Apart from your ACC levy which has its own specific conditions. If you’re unsure exactly which category to use, don’t worry, they’re all claimed at 100% so selecting one category or the other won’t have an effect on your tax calculations.
General Merchandise – General items you purchased for use in your business.
Digital Products & Services – Work related digital products or service subscriptions.
Printing & Stationery – Work related printing or stationery.
Tools & Materials – Tools or materials you purchased for use in your business.
Postage/Shipping – Sending goods for business.
Advertising/Marketing – Advertising or marketing your business.
Education & Training – Professional development costs (not obtaining a degree).
Subcontractor – Payments to subcontractors who assist with your business.
General Services – Business related service fees.
Legal & Accounting – Business related legal and accounting fees (including Solo).
Equipment Repairs – Repair costs for business related equipment.
Business/Income Insurance – Income or business related insurance costs.
Business Registration – Business or intellectual property registration fees.
Manufacturing – Manufacturing costs related to your business.
Hirage – Hiring items to help you generate income.
Licences – Work related licence or permit fees.
Clubs & Memberships – Professional membership fees. You can’t claim your gym membership.
Bank Fees – Business related bank account or merchant service fees. Bank fees don’t include GST.
Clothing & Apparel – Business branded clothing or protective work clothing. You can’t claim general clothing that you wear to work or even clothing that you bought specifically for work such as suits.
Gifts – Gifts for employees or clients other than food or drink. You can’t give gifts of cash and any gifts for employees must have a maximum value of $300 per quarter per employee. Staff discounts are considered a gift.
ACC Levy – Payment of your ACC levy invoice is fully claimable.
Meals & Entertainment Expenses
Work related meals and entertainment expenses go in these categories and are claimed at 50% by default. If you’re unsure what to claim, a good rule of thumb is if it’s helping you earn your income it’s usually claimable.
For more detailed information check out our complete guide to claiming entertainment expenses.
Food & Drink – Food or drink with/for current or potential clients, staff or suppliers. Claimed at 50%.
Entertainment & Recreation – Entertaining current or potential clients, staff or suppliers. Claimed at 50%.
Rental Property Expenses
You can claim personal tax deductible expenses if you have a rental property, a flatmate in your home or earn income from a rental service such as AirBnb. Expenses relating to long-term rentals (more than 4 consecutive weeks) are exempt from GST. However, short-term rental expenses (such as from an AirBnb or Bookabach) need to include GST.
If you are only renting part of the property, such as with a flatmate, you can only claim a portion of the expenses based on the percentage of the property that you rent out.
Solo will automatically work out your GST based on the type of rental you have selected in your settings. If you are renting part of the property Solo will ask for the size of the house and the size of the rental area to make the correct calculation. You also have the option to split your rental income and expenses if you own only a portion of the property.
Rental Rates – Council rates on your rental property.
Rental Insurance – Insurance on the rental property or the rental’s mortgage.
Rental Repairs & Maintenance – Commercial labour or material costs to repair and maintain the rental. You cannot claim for your time if you are doing the work yourself. And you cannot claim alterations that add value to the property, such as adding an extension.
Rental Mortgage Interest – Mortgage interest only, and not the principal portion of your repayments. Mortgage interest always does not include GST, even for a short-term rental.
Rental Utilities – Utilities provided to your tenants such as water, power or internet.
Rental Advertising – Advertising for new tenants.
Rental Cleaning – Commercial cleaning fees or cleaning products for the rental. You cannot claim for your time if you are doing the cleaning yourself.
Property Management – Fees or commission paid to a property manager.
Rental Legal Fees – Legal fees related to buying the rental, tenancy agreements or disputes. Your total legal fees cannot be more than 10k for the year.
Commercial Office Expenses
If you work from a commercial office, workshop or a co-working space you can claim 100% of those expenses.
Office Rent – Rent for a commercial office, workshop or co-working space.
Office Utilities – Utility bill for a commercial office, workshop or co-working space.
National Work Travel Expenses
You can claim lots of your daily expenses when you’re travelling around New Zealand for work. If you take a holiday as part of the same trip, you can only claim for the parts of the trip that were work-related.
For more detailed information check out our complete guide to claiming travel expenses.
Domestic Flights – Domestic flights for a work related trip.
Accomodation – Accomodation costs while travelling for business.
Transport – Transport costs such as a taxi or rental car while on a work trip.
Travel Food & Drink – If the meal or function involves an existing or potential business contact as a guest then is 50% claimable and you should use the general ‘Food & Drink’ category instead. General food and drink while travelling for work is not claimable.
International Work Travel Expenses
When it comes to travelling internationally and claiming business expenses, your overseas expenses will not included GST. Apart from travel insurance which is usually purchased within New Zealand before you leave the country.
If the main purpose of your trip is business but you take a free half-day to enjoy exploring a new city, the personal part of the trip is doesn’t count. You can still claim all your travel expenses.
If the main purpose of your trip is a holiday but you happen to meet up with a couple of business contacts while you’re there, the business part of the trip is incidental to the holiday. You can’t claim any of your travel expenses.
When combining a business trip with a holiday, you must split out your expenses and only claim the portion that relates to the working part of the trip.
For more detailed information check out our complete guide to claiming travel expenses.
International Flights – International flights for an overseas business trip. Does not include GST.
Overseas Accommodation – Accomodation costs while on an overseas business trip. Does not include GST.
Overseas Transport – Transport costs while on an overseas business trip. Does not include GST.
Overseas Entertainment & Recreation – Entertaining current or potential clients, staff or suppliers overseas. Does not include GST and is 50% claimable.
Travel Insurance – Travel insurance for an overseas business trip.
Hopefully this article has given you a clearer understanding of your personal tax deductible expenses and how the expense categories in Solo work. We’re constantly improving Solo to empower self-employed New Zealanders and make claiming personal tax deductible expenses even easier.