Business Expenses: What You Can (and Can’t) claim

The Wake up Call

After years working with small businesses, I’ve seen one thing happen again and again:
someone like Alex, a Wellington tradie, doing their best to stay on top of tax, but still getting caught out.

Alex was busy running jobs, quoting work, and keeping customers happy.
When it came to the paperwork, he tossed every receipt into a box, thinking, “If it’s business, I’ll claim it.”

At tax time, his accountant broke the news:
“Sorry mate, half of this can’t be claimed.”

Some costs were personal, some were only partly deductible, and some had no record at all.
It’s a situation I see often, and it’s completely avoidable once you understand how business expenses are generally treated for tax purposes in New Zealand.

What Counts as a Business Expense

In plain terms, you can usually claim costs that are directly connected to earning your business income.
The expense needs to clearly relate to the work you do and be supported by proper records.

From experience, here’s what good practice looks like:
✅ Keep a separate business account and card, avoid mixing personal spending.
✅ Keep every receipt or invoice, even digital ones.
✅ Record how much of each cost is for business use (especially power, phone, or internet).
✅ Use a system like Xero to track, not guess.
✅ Stay consistent, it makes things easier for your accountant and if your records are ever reviewed.

Typical Examples of Claimable Costs

Many common day-to-day business costs are legitimate, such as:
– Tools, materials, and equipment used for work
– Home-office expenses (business share only)
– Accounting, insurance, and professional fees
– Vehicle and travel expenses for business purposes
– Marketing, website, and software subscriptions
– Depreciation on business assets over time

Costs That May Be Only Partly Claimable

Some expenses have both business and personal elements, these can’t usually be claimed in full. Examples include:
– Personal items occasionally used for work
– Entertainment, client meals, or gifts
– Travel that combines business and leisure
– Meals or coffees that aren’t clearly business-related

When in doubt, record it anyway and check with your accountant before claiming.
It’s easier to exclude a cost than explain a missing one later.

A Simple Way to Think About It

Think of business expenses like tools in your toolbox,  you only use what’s needed for the job.
Claim the right ones, leave the rest.
That mindset keeps you compliant, protects your cash flow, and makes tax time far less stressful.

Explore more guides like this in our Plain English Business Series.

Disclaimer

This article is intended as general guidance based on publicly available information and professional experience.
It is not official tax advice. Please consult your accountant or tax professional to confirm what applies to your specific situation.