InvioInvio

Sole Trader Tax NZ What You Can Claim, and What You Owe

A practical guide to tax obligations and deductions for New Zealand sole traders - what you can claim, and the real income tax brackets and ACC levy behind every dollar you set aside.

No credit card required • Free forever for up to 5 invoices a month

Income tax, to scale

Every NZ income tax bracket, drawn at its real dollar width - for the 2026-27 tax year (1 April 2026 - 31 March 2027)Brackets unchanged since 31 Jul 2024

$180,000 and up

39%

No ceiling - every dollar above $180,000 is taxed at this rate.

$0 to $15,600
10.5% $0 - $15,600
$15,600 to $53,500
17.5% $15,600 - $53,500
$53,500 to $78,100
30% $53,500 - $78,100
$78,100 to $180,000
33% $78,100 - $180,000
39% $180,000 and up, no ceiling
ACC earner's levy cap, 2026-27: $156,641

Your taxable income is total business income minus allowable business expenses - what counts as a deduction is next.

What is a sole trader in NZ?

A sole trader is a person who runs their own business as an individual - the simplest business structure in New Zealand. You don't register a company or file separate company tax returns; your business income is simply added to your personal income tax return.

TradiesFreelancersContractorsConsultantsCleanersGardenersTutorsDrivers

What can you claim as a sole trader?

Anything genuinely used to earn your business income, in the six categories below. Only the business-use portion is deductible where an expense is part personal.

Vehicle expenses

  • Fuel (business portion)
  • Registration and WOF
  • Insurance (business %)
  • Repairs and maintenance
  • Depreciation

Keep a logbook for 3 months to calculate your business-use percentage.

Home office

  • Rent or mortgage interest (%)
  • Power and heating (%)
  • Internet (business %)
  • Contents insurance (%)
  • Office furniture

Calculate: floor area of your office ÷ total house floor area.

Tools and equipment

  • Tools under $1,000 (full deduction)
  • Tools over $1,000 (depreciate)
  • Safety equipment
  • Work uniforms and clothing
  • Protective gear

Technology and software

  • Computer and laptop
  • Phone (business %)
  • Software subscriptions
  • Invoicing software
  • Cloud storage

Professional services

  • Accountant fees
  • Legal fees
  • Business insurance
  • Professional memberships
  • Training and courses

Other expenses

  • Advertising and marketing
  • Website hosting
  • Bank fees (business account)
  • Stationery and supplies
  • Business travel

Sole trader GST requirements

To claim GST on your expenses you need valid tax invoices - and to charge GST, you must issue them. A dedicated invoice generator handles this automatically. For the full field-by-field rules, see NZ tax invoice requirements.

Must register for GST

You must register 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.

  • 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.

Not GST-registered yet?

Leave out the GST number and GST lines on your invoices - just show your total. Once your turnover crosses $60,000, registration is compulsory within 21 days.

Sole Trader Tax FAQs

Common questions from NZ sole traders about tax, ACC, and GST.

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.
What can you claim as a sole trader in NZ?
Sole traders in NZ can claim business expenses including: vehicle costs (business portion), tools and equipment, work clothing, home office expenses, phone and internet, professional fees, marketing costs, and business software subscriptions.
What tax rate do sole traders pay in NZ?
Sole traders pay income tax on their net profit at personal tax rates: 10.5% up to $15,600, 17.5% from $15,601-$53,500, 30% from $53,501-$78,100, 33% from $78,101-$180,000, and 39% over $180,000. These are the brackets in force since 31 July 2024, and IRD's own rates page shows them unchanged for the current 2026-27 tax year (1 April 2026 - 31 March 2027).
Do sole traders pay ACC, and how much?
Yes - on top of income tax, sole traders pay the ACC earner's levy on their liable income. For the current 2026-27 tax year (1 April 2026 - 31 March 2027) it is 1.75%, capped at $156,641 of liable income (a maximum levy of $2,741.22). It's collected alongside your income tax, not as a separate bill, and IRD reviews the rate every April - check the calculator below for the year you're filing.
Do sole traders need to register for GST?
Sole traders must register for GST if their turnover exceeds $60,000 in any 12-month period. Registration is optional below this threshold but can be beneficial for claiming GST on business expenses.

Keep your sole trader finances organised

Track your income with professional invoices. Invio makes it easy to see what you've earned and stay on top of payments.

No credit card required • Free forever for up to 5 invoices a month