Tax Guide 2026

Sole Trader Tax NZWhat You Can Claim in 2026

A practical guide to tax obligations and deductions for New Zealand sole traders. Understand what you can claim and keep more of your hard-earned money.

Definition

What 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

Tradies

Freelancers

Contractors

Consultants

Cleaners

Gardeners

Tutors

Drivers

Tax Brackets

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

Deductions

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

Compliance

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.

Resources

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.

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 $14,000, 17.5% from $14,001-$48,000, 30% from $48,001-$70,000, 33% from $70,001-$180,000, and 39% over $180,000.

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.

Get Started

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 • 5 free invoices/month