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Sole Trader Expenses NZ What You Can Claim

A category-by-category guide to what New Zealand sole traders can claim - and how GST registration changes the amount you actually claim.

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You can claim a cost if it earned your income - not if it was private or domestic.

Mixed-use costs - vehicle, home office, phone - only the business-use share.

What you can claim

The business-use share

  1. 01Materials, tools, and subcontractor costs - the direct cost of doing the job.
  2. 02The business-use share of something mixed - your vehicle, home office, or phone.
  3. 03Insurance, ACC levies, and software that keep the business running.
  4. 04Professional fees, advertising, and admin costs.

What you can't claim

Private or domestic

  1. 01Purely private or domestic spending - groceries, personal clothing, family trips - even if paid from a business account.
  2. 02The personal-use share of anything mixed-use, beyond the business-use portion you can justify.
  3. 03Fines and penalties - parking tickets, traffic fines - incurred on the job.
  4. 04Client entertainment beyond the 50% IRD's entertainment rules allow.

Clear cases, and the ones that aren't

A set of tools bought for a job clears the test easily: genuinely incurred in earning your business income, and nothing private or domestic about it. A family grocery shop does not, even if you occasionally eat while working.

Plenty of real costs sit in between - a vehicle used for both work and weekends, a home office in a house you also live in, a phone you use for both clients and mates. For those, you claim the business-use portion only, worked out on a reasonable, defensible basis - not the whole bill.

What sole traders typically claim

Eight categories cover most of what a sole trader spends to earn their income.

Materials & tools

  • Materials bought for a specific job
  • Tools and small equipment under $1,000 (claim in full, the year you buy it)
  • Tools and equipment over $1,000 (depreciated over their useful life, not claimed all at once)
  • Safety gear and protective equipment

Vehicle costs

  • Fuel, WOF/rego, insurance, repairs, and depreciation - business-use portion only
  • Track business-use % with a logbook (a 90-day sample is the common method), or use IRD's published kilometre rate for a simpler mileage-based claim
  • Personal trips (the school run, groceries) are not claimable, even in a work vehicle

Vehicle claims are one of the most-checked areas by IRD - keep whichever method's records you choose.

Home office

  • A reasonable apportionment of rent/mortgage interest, power, and contents insurance if you work from home
  • The usual method is business floor area as a percentage of total house floor area
  • IRD also publishes a square-metre rate you can use instead of tracking actual home running costs - check IRD's current published rate

Phone & internet

  • The business-use percentage of your phone and internet bills
  • A simple, reasonable estimate is fine - you do not need to itemise every call

Subcontractors

  • Payments to subcontractors for work on a job are a direct business cost
  • If you deduct withholding tax from a subcontractor payment, that is a separate PAYE-style obligation - not something the subcontractor invoice cost itself changes

Insurance & levies

  • Business insurance - public liability, tools, vehicle, professional indemnity
  • ACC levies you pay as a self-employed person
  • Income protection or life insurance premiums are a different case - deductibility depends on the policy, so check with your accountant

Software & subscriptions

  • Invoicing and accounting software (Invio included)
  • Cloud storage, design tools, and other software used to run the business
  • Website hosting and domain costs

Professional & admin costs

  • Accountant and bookkeeper fees
  • Bank fees on a business account
  • Advertising and marketing spend
  • Professional memberships and training directly related to your trade

How GST registration changes what you claim

The same expense, two different claimable amounts, depending on your GST status.

Not GST-registered

Claim the full, GST-inclusive price as your expense. You have no mechanism to reclaim the GST component separately, so the whole amount you paid is genuinely your business cost.

GST-registered

Claim the GST-exclusive price as your expense, then claim the GST portion back separately on your GST return. Deducting the GST-inclusive amount as an expense as well would double-count it.

Not sure whether you need to register? Read our GST registration guide for the $60,000 threshold and the exact myIR steps, or use the GST calculator to split any figure into its GST and ex-GST components.

Sole Trader Expenses FAQs

Common questions from NZ sole traders about what they can claim.

What can I claim as a sole trader in NZ?
Broadly, any expense you incur to earn your business income and that is not private or domestic in nature. That covers materials, tools, a business-use share of your vehicle and home office, phone and internet, subcontractors, insurance, ACC levies, and software subscriptions. See the categories above for the detail, and Sole trader tax NZ for how this fits into your overall tax picture.
Can I claim my vehicle if I use it for both work and personal driving?
Yes, but only the business-use portion. Keep a logbook (a 90-day sample is a commonly used method) to establish your business-use percentage, or use IRD's published kilometre rate as a simpler alternative. Purely personal trips are never claimable, even if they happen in a vehicle you also use for work.
Do I need a receipt for every expense?
Generally, yes. IRD expects you to hold evidence for what you claim - receipts, invoices, or bank statements at minimum, kept for 7 years under the Tax Administration Act 1994. A bank statement line alone is weaker evidence than the original receipt or invoice, so keep both where you can.
Can I claim my home office as a sole trader?
Yes, if you genuinely work from home. Claim a reasonable apportionment of running costs (rent/mortgage interest, power, contents insurance) based on the business-use share of your home's floor area, or use IRD's published square-metre rate instead of tracking actual costs.
If I am not GST-registered, do I claim the GST-inclusive or GST-exclusive amount?
If you are not GST-registered, claim the full GST-inclusive amount as your expense - you have no way to recover the GST separately, so it is genuinely part of your cost. If you are GST-registered, claim the GST-exclusive amount as your expense and claim the GST portion back separately on your GST return - claiming it twice would overstate your deduction. See our GST calculator to split GST-inclusive figures.
Are entertainment expenses deductible?
Some business entertainment - client meals and similar - is only 50% deductible under IRD's entertainment expense rules, not 100% like most other costs. This is a narrower, specific rule, so if entertainment is a meaningful cost in your business it is worth checking the detail with your accountant.
Does Invio track my expenses for me?
Yes. Invio's expense tracking lets you log a business expense against one of eight NZ categories (materials, tools & equipment, fuel & vehicle, subcontractor, insurance, phone & internet, software & subscriptions, other), mark whether it's GST-inclusive, and export a financial-year total as a CSV - all free on every plan.

This is general information, not tax advice. Whether a specific cost is deductible depends on your circumstances - check ird.govt.nz or ask your accountant before you claim anything you are unsure about.

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