InvioWhat is a Sole Trader in NZ?
A sole trader is a person who runs their own business as an individual. It's the simplest business structure in New Zealand - you don't need to register a company or file separate company tax returns. Your business income is simply added to your personal income tax return.
Common Sole Trader Examples
Sole Trader Tax Rates (2025-2026)
| Taxable Income | Tax Rate |
|---|---|
| $0 - $14,000 | 10.5% |
| $14,001 - $48,000 | 17.5% |
| $48,001 - $70,000 | 30% |
| $70,001 - $180,000 | 33% |
| $180,001+ | 39% |
Your taxable income = Total business income - Allowable business expenses
What Can You Claim as a Sole Trader?
Vehicle Expenses
- Fuel (business portion)
- Registration & WOF
- Insurance (business %)
- Repairs & maintenance
- Depreciation
Tip: Keep a logbook for 3 months to calculate your business use percentage.
Home Office
- Rent/mortgage interest (%)
- Power & heating (%)
- Internet (business %)
- Contents insurance (%)
- Office furniture
Calculate: Floor area of office ÷ Total house floor area
Tools & Equipment
- Tools under $1,000 (full deduction)
- Tools over $1,000 (depreciate)
- Safety equipment
- Work uniforms & clothing
- Protective gear
Technology & Software
- Computer & laptop
- Phone (business %)
- Software subscriptions
- Invoicing software (Invio!)
- Cloud storage
Professional Services
- Accountant fees
- Legal fees
- Business insurance
- Professional memberships
- Training & courses
Other Expenses
- Advertising & marketing
- Website hosting
- Bank fees (business account)
- Stationery & supplies
- Business travel
Sole Trader GST Requirements
Generating Tax Invoices for Returns
To claim GST on your expenses, you need valid tax invoices. And to charge GST, you must issue them. Using a dedicated invoice generator ensures you meet all IRD requirements automatically. For specific rules on what your invoices must include (especially for amounts over $200), see our updated NZ Tax Invoice Requirements 2026 guide.
compliant_invoice.pdf
Must Register for GST
You must register for GST if your turnover exceeds $60,000 in any 12-month period.
- Charge 15% GST on sales
- Claim GST on business expenses
- File GST returns (1, 2, or 6 monthly)
- Issue tax invoices
Optional Registration
Under $60,000? You can still register voluntarily. Benefits include:
- Claim GST on business purchases
- Look more professional to clients
- Useful if you have high expenses
Note: Prices may seem higher to non-GST registered customers.
Frequently Asked Questions
Do I need an accountant as a sole trader?
It's not legally required, but an accountant can save you money by identifying deductions you might miss and ensuring you're compliant. At minimum, consider an accountant for your end-of-year tax return.
When do I pay tax as a sole trader?
You pay provisional tax in instalments throughout the year (if your tax bill is over $5,000), then file an individual tax return (IR3) after March 31. Any balance owing or refund is calculated based on your actual income.
Can I claim expenses without receipts?
Generally no. The IRD requires you to keep records of all business expenses for 7 years. Bank statements can support claims, but original receipts or invoices are best. Use Invio to keep digital records of all your invoices.
What's the difference between sole trader and company?
A sole trader is simpler and cheaper to run - you pay personal tax rates and there's no separate legal entity. A company has limited liability protection and pays a flat 28% tax rate, but has more compliance requirements and costs.