What business expenses can a sole trader claim in New Zealand?

The general test is whether the expense was incurred in earning your business income. That covers materials, tools, software, professional fees, business insurance, work travel, training that maintains your existing skills, and the business share of costs like your vehicle, phone and home office. Private expenditure is not deductible, and anything used for both purposes must be apportioned. Some categories have their own rules: entertainment is commonly limited to 50 percent, and capital items are usually depreciated rather than expensed in full.

How do I work out a business use percentage?

It must be reasonable and you must be able to explain how you reached it. A home office is commonly apportioned by floor area, a vehicle by a logbook covering a representative period, and a phone by an itemised sample of calls or data. The method matters more than the precision: an apportionment supported by a short written basis will survive review, and a round number with no working behind it is exactly what gets challenged.

Do I claim the GST-inclusive or GST-exclusive amount?

If you are GST registered, you reclaim the GST through your GST return and then deduct only the GST-exclusive amount for income tax. If you are not registered, there is no GST claim and you deduct the full GST-inclusive amount you paid. Doing both, claiming the GST and also deducting the GST-inclusive figure, relieves the same money twice and is a common error in self-prepared returns.

What is my expense claim actually worth?

It is worth the deductible total multiplied by your marginal tax rate, plus any GST reclaimed. Because the claim comes off the top of your profit it usually spans more than one tax bracket, so a single rate understates or overstates it. This calculator computes the tax on your profit with and without the claim and takes the difference, which is the only method that handles a claim crossing a bracket correctly.

Does claiming more expenses always leave me better off?

Claiming everything you are genuinely entitled to does. Spending money in order to create a claim does not, because you only recover your marginal rate of it and remain out of pocket for the rest. A deduction reduces the cost of something you needed; it never makes something you did not need free. The distinction matters most in the weeks before balance date, when the temptation to buy something for the claim is at its strongest.

Annual Deductible Expenses Calculator

Rates current for the 2026/27 tax year. Reviewed 5 August 2026.

Quick answer On the default categories, $21,700.00 of spending produces a claim of $15,040.00 once business use is apportioned. A GST-registered trader reclaims $1,961.74 of GST and the remaining $13,078.26 reduces income tax by $4,315.83. Total relief is $6,506.44.

Most sole traders under-claim, and they do it in the same two ways every year. The first is forgetting whole categories, because the expenses that are easiest to overlook are the ones that never generate an invoice addressed to the business: the share of your home you work in, the portion of your phone bill that is work calls, the software renewing quietly on a personal card. The second is claiming nothing for mixed-use items because working out an apportionment feels harder than skipping it, which trades a real deduction for a small amount of arithmetic. This calculator lays out ten categories, applies a business use percentage to each, and totals what you are entitled to claim. It then does the part that decides whether the effort was worth it, which is converting that total into money. A claim is not a refund. If you are GST registered the GST comes back through your return, and what remains reduces your taxable profit, so the income tax saving is the claim multiplied by your marginal rate. Those two reliefs are separate and are shown separately here, because treating them as one is the most common error in a self-prepared return.

Profit before these expenses Sets the marginal rate the claim is relieved at

GST registered? Registered means the GST portion comes back separately

Your expenses by category

Enter what you spent for the year including GST, and the share that is business use. Leave a category at zero if it does not apply.

Category	Spent	Business use	Claimable
Home office			$540.00
Vehicle running costs			$3,600.00
Phone and internet			$900.00
Tools and equipment			$2,400.00
Software and subscriptions			$1,200.00
Business insurance			$900.00
Accounting and professional fees			$1,500.00
Training and development			$800.00
Materials and supplies			$2,000.00
Work travel			$1,200.00

Total claimable

$15,040.00

from $21,700.00 spent

Total relief
$6,506.44
GST reclaimed plus tax saved

Effective relief rate

43.26%

of the claimable total

What the claim is worth

Total spent across all categories$21,700.00

Disallowed as private use$6,660.00

Total claimable$15,040.00

GST reclaimed$1,961.74

Deductible for income tax$13,078.26

Profit before the claim$95,000.00

Profit after the claim$81,921.74

Tax before the claim$21,227.50

Tax after the claim$16,911.67

Income tax saved$4,315.83

Total relief$6,506.44

Effective relief on the claim43.26%

This is an estimate, not tax advice. Whether a particular expense is deductible, and in what proportion, depends on your circumstances. Entertainment is commonly limited, capital items are usually depreciated rather than expensed, and some categories have specific rules not modelled here. Every figure needs a receipt. Confirm your position with Inland Revenue or your accountant.

The categories people forget

Whole classes of legitimate expense go unclaimed every year because nothing arrives addressed to the business. The home office is the largest: a room used regularly and exclusively for work supports an apportionment of rent or mortgage interest, rates, power and insurance by floor area, and it is frequently worth more than every other category combined. Phone and internet are next, because the bill is personal and the work use is real. Then there are the small recurring items, cloud storage, domain renewals, professional memberships, that are individually trivial and collectively significant. Working through a category list once a year finds most of them.

Apportionment is worth doing properly

The difference between claiming nothing for a mixed-use item and claiming a defensible share is real money. A vehicle at 60 percent business use on $6,000 of running costs is a $3,600 claim, worth roughly $1,500 in combined GST and tax relief for someone in the 33 percent band. The reason people skip it is that it seems to require precision, which it does not. It requires a reasonable method, recorded once: floor area for a room, a representative logbook period for a vehicle, an itemised sample for a phone.

Worked example

A GST-registered sole trader with $95,000 of profit before expenses works through the ten categories and finds $21,700.00 of spending. Apportionment removes $6,660.00 as private use, mostly from the home, vehicle and phone, leaving a claim of $15,040.00. The GST portion, $1,961.74, is reclaimed through the GST return, so the income tax deduction is $13,078.26.

That deduction takes profit from $95,000.00 to $81,921.74, and tax from $21,227.50 to $16,911.67, a saving of $4,315.83. The ACC earner levy is charged on the same profit, so the claim saves a further $228.87 of levy. Combined with the GST, total relief is $6,506.44, or 43.26% of the claimable total. The claim spans the 33 percent and 30 percent bands, which is why the effective relief sits between them rather than at either.

How this is calculated

Each category's claimable amount is what you spent multiplied by its business use percentage. The claimable total is the sum across categories. If you are GST registered, the GST portion is taken as three twenty-thirds of that total, which extracts 15 percent GST from a GST-inclusive figure, and the income tax deduction is the remainder; if you are not registered there is no GST claim and the whole claimable total is deductible. Income tax saved is the tax on your profit less the tax on your profit after the deduction, computed rather than taken at a single marginal rate so that a claim spanning brackets is handled correctly. Rates are those in force from 1 April 2025: 10.5% to $15,600, 17.5% to $53,500, 30% to $78,100, 33% to $180,000, and 39% above that.

Related NZ calculators

Deduction Value Calculator for a single expense
Home Office Apportionment Calculator for the largest category
Vehicle Logbook Calculator for a defensible vehicle percentage
Depreciation Calculator for capital items that cannot be expensed
Self-Employed Take-Home Calculator for what you keep after all of it