Some expenses can only be claimed under certain circumstances adding to the whirlpool of confusion! And don’t get me started on whether you need to keep that receipt or not…please keep it!!

Below are a couple of examples of some of the expenses that fall into this grey area of mystery – sometimes we find these are overclaimed and other times completely missed.

Entertainment Expenses:‍

This is the most confusing expense category as it’s often circumstantial and often only 50% claimable…your takeaway flat white on the way to work is not, however, takeaway flat whites taken to the office for a meeting are claimable. Wining and dining clients, Friday night shout, corporate boxes, and even the business use of a holiday home can generally all be claimed. It’s important to keep a record so you can “justify” the business element of these expenses. Full IRD guide here or just ask your bookkeeper!

Vehicle Expenses: ‍

You can only claim expenses for the business use of a vehicle. If the vehicle is used for business 100% of the time, then all expenses related to the running and upkeep of the vehicle are fully claimable – think fuel, insurance, WOF, rego, maintenance, and so on. However, if the vehicle is used for personal travel (eg. over the weekend) an adjustment will need to be made to split a percentage of the expenses as personal. The easiest and most accurate way to calculate your personal usage % is by keeping a logbook for 3 months, link here to IRD’s sample. Please note personal use of company-owned vehicles can also trigger FBT – but that’s a topic for another time (if you think this may apply to you please talk to your bookkeeper or accountant)

Work clothes and/or Uniform:‍

This is another one that can be circumstantial – if you are a musician you may well be able to claim those shiny new shoes and funky outfits to wear on stage, however, those of us who work in an office cannot claim any clothing as a business expense even if you swear the suit or heels will only be worn to the office. Clothing must be branded, either screen-printed or embroidered (no, writing your company name on with a sharpie doesn’t count), or be a mandated uniform or health and safety item such as a hard hat, high vis, or PPE. This is an expense that is very industry-specific.

Travel:

‍Travelling from home to your office doesn’t count! But going to a conference or travelling from the office to see a client does. Flights, accommodation, and food/drink while travelling are claimable as long as the travel is genuinely for business purposes, again this can vary and be industry-specific. The family holiday to Fiji to “research” potential leads doesn’t count! But your flights to Welly to pitch to a potential client do.

Home Office:

‍If you have a home office or use part of your home for business purposes you may be able to claim a portion of expenses such as power, internet, rates, house and contents insurance, mortgage/rent, office furniture, and so on. Home office claims are generally worked out on a percentage based on the amount of space used for business purposes. For example, if your house is 100sqm and your office is 10sqm then the proportion of your house used for business is 10%,therefore you can claim 10% of expenses. The below infographic from IRD shows the range of expenses you may be able to claim, even toilet paper!
‍

Claiming expenses reduces your income and therefore the amount of tax you have to pay so it’s worth taking the time to review what you are/aren’t claiming. Just remember anything you claim you must be able to justify why/how it’s a business expense as IRD does do random spot audits so don’t go claiming the new 85-inch 4k smart TV or family flights to Oz! Keeping good records to support your expense claims such as receipts/invoices and a note (e.g. flat whites for meeting with XYZ client)is all you need to do. We use an app called Ezzybills to help our clients with this, making the process quick, easy, and efficient. If you’re unsure what can be claimed talk to your bookkeeper.
‍
Get in touch with your bookkeeper or accountant if you are unsure of anything.