Important and complex enough to warrant a separate section and a separate blog!

Motor vehicle expenses

• Fuel, servicing, registration and insurance can all be recorded as business expenses. That said, you must make an adjustment if the vehicle is available for personal use or being used privately
• You can reimburse employees if they personally pay for any motor vehicle expenses.
• If an employee uses their own vehicle for business, you can reimburse them based on the number of business kilometres travelled, or on actual costs incurred.
• You can provide your employees with a vehicle allowance.

• Items you buy to sell to clients
• ACC levies
• Accounting fees
• Advertising
• Bank fees and credit card charges
• Commission paid to others to sell your products/services
• Computer, software, and internet expenses
• Consultancy fees
• Contractors and subcontractors
• Depreciation on business assets
• Freight
• Health and safety costs
• Insurance on business assets
• Interest on loans and overdrafts
• Legal fees – if related to the operation of the business to produce income
• Licenses, registrations, and subscriptions 
• Motor vehicle expenses (see also ‘Partly claimable’ in the section below
• Office expenses
  • Light, heat, and power
  • Milk, tea, coffee, biscuits for staff
  • Cleaning and toiletries
  • Telephone
• Postage 
• Printing and stationery
• Protective clothing
• Rent and lease of assets
• Salaries and wages
• Training and courses
• Travel (national and international)

Nature of business

Where or not the cost is tax deductible can often depend on the nature of your business is also a factor. For example, a media production company may be able to claim Netflix and Sky TV subscriptions as expenses (they are critical for research), but a construction business likely won’t.

It may be reasonable for farming activities to claim veterinary expenses, but these expenses would be queried for a retailer.

Repairs and maintenance

• Repairing an asset to return to its original state
• Maintaining an asset to ensure its continued operation
• Rectifying general wear and tear
• Cleaning, rubbish disposal

If the transaction improves the asset, it cannot be claimed as an expense. It’s instead considered to be part of the asset and depreciated.  

Use of (part of) your home for the business

If you can show there is part of your home used primarily for business purposes, you can claim a portion of your home costs. These can include:

• Rent
• Mortgage interest
• Electricity
• Rates
• Insurance (home and contents)
• Telecommunication bills 
  
  

The amount you can claim is dependent on the floor area dedicated to business. 

Expenses paid personally

Perhaps you’ve used a personal credit card or paid cash for business expenses such as travel or online purchases. Just make a list and send to your Traktion accountant to enter into Xero and claim any GST component. 

Make sure to keep the invoices. While they might not be necessary for your financial statements, Inland Revenue still requires that they be kept for at least seven years.

Entertainment subject to FBT

• Food and drink 
• Social events
• Office shouts
• Sports or cultural events

Use of (part of) your home as an office

If you can show there is part of your home is primarily used for business purposes, you can claim a portion of your house-related costs. These can include:

• Rent
• Mortgage interest
• Electricity
• Rates
• Insurance (home and contents)
• Telecommunication bills 

Motor vehicle expenses

• Referring to the section ‘Motor vehicle expenses’ above, an adjustment must be made if the vehicle is available for personal use or used privately

• Drawings of a sole trader
• Personal travel and accommodation
• Any costs not necessary in performing business activities
• Parking and motor vehicle fines
• Late payment penalties
• Any other fines or penalties

[see also the section “Things you think you are claimable but aren’t”]

• Clothing (except protective clothing or if there is prominent printed business branding)
• Shoes which can be worn outside of the business environment
• Doctor and medical bills, physiotherapy (even if injured on the job)
• Glasses
• Gym membership
• Meals when working out of town
• Meals when not working out of town
• Personal travel and accommodation
• Personal grooming
• Private use or availability of a business vehicle

* You could reimburse an employee for some of these costs or provide an allowance – these would be deductible. The employment agreement usually covers these circumstances. 

As mentioned at the top of this article, you can claim any business expense that’s linked to the production of your business income.

However, for international travel, you won’t be eligible for GST deductions on any part of an overseas trip.

For any travel that requires six or more nights in a row, you need to keep a travel diary. The following needs to be recorded:

• Travel movements and activities
• Where you were
• What you were doing
• When you stop for meals
• The start and end times for activities
  
  

 As with any business expense, you should retain copies of invoices or tickets.

If a trip is part business, part pleasure, we can only claim a percentage or direct costs of the business portion of the trip. For example, if your Fiji trip included a week on the beach and a week of client meetings in Suva, you can claim all of the Suva expenses and half of the travel costs (such as air fares).

Income from residential property rental should not be declared for GST, and any GST on costs cannot be claimed.

Property-related expenses*

• Rates
• Insurance
• Property management fees
• Repairs and maintenance
• Travel to and from your property for inspections and repairs

Financing expenses*

• Mortgage repayment insurance
• Loan fees
• Interest on mortgage (subject to interest deductibility rules)

Legal and consulting fees*

• Legal fees incurred when buying and selling a rental property
• Legal action to recover unpaid rent
• Costs for evicting a tenant
• Preparation of a tenancy agreement
• Accountancy fees
• Valuation fee to obtain a mortgage

Non-deductible costs

• Advertising the sale of a rental property**
• Commission paid to real estate agents to sell the property**
• Improvements (these will be depreciated)
• Mortgage repayments 
  
  

* Subject to ring-fencing rules.
** These costs are deductible if the sale falls under the Brightline regime.