If you’re a business owner in New Zealand, you’ll likely have expenses that are directly related to your business operations. These expenses can include anything from office rent to equipment purchases to travel expenses.
As a business owner, you can claim these expenses as deductions on your tax return, reducing your taxable income and potentially lowering your tax bill. In this blog, we’ll explore the basics of claiming business expenses in New Zealand.
What are Business Expenses?
Business expenses are costs that you incur in the course of running your business. These expenses can be divided into two categories: capital expenses and operational expenses.
Capital expenses are expenses that you incur when you buy an asset that will be used in your business for more than a year. Examples of capital expenses include the purchase of equipment, vehicles, and property.
Operational expenses are expenses that you incur on a regular basis to keep your business running. These expenses can include things like rent, utilities, office supplies, and travel expenses.
Claiming Business Expenses
In order to claim business expenses, you must be able to demonstrate that the expenses are directly related to your business operations. This means that the expenses must have been incurred for the purpose of earning income for your business. In addition, you must be able to provide documentation to support your claims, such as receipts or invoices.
When claiming business expenses, it’s important to keep accurate records of all expenses incurred throughout the year. This can include keeping receipts, maintaining a logbook for travel expenses, and tracking any other expenses that are relevant to your business.
Business expenses can be claimed as deductions on your tax return, which can reduce your taxable income and potentially lower your tax bill. However, it’s important to note that there are specific rules around claiming business expenses in New Zealand, and not all expenses can be claimed as deductions.
Examples of expenses that can be claimed as deductions include:
- Rent and utilities for your business premises
- Office equipment and supplies
- Advertising and marketing expenses
- Travel expenses, including meals and accommodation
- Professional development courses and seminars
Examples of expenses that cannot be claimed as deductions include:
- Private expenses that are not related to your business operations
- Fines and penalties, such as parking tickets or late payment fees
- Expenses that are not supported by documentation, such as receipts or invoices
In conclusion, claiming business expenses can be a valuable way to reduce your taxable income and lower your tax bill. However, it’s important to keep accurate records and ensure that you are only claiming expenses that are directly related to your business operations.
If you’re unsure about which expenses can be claimed as deductions, it’s always best to consult us.
