If you operate a company, what would you say if we told you that you could claim back some of the taxes you paid? Well! Let me shed some light on tax-deductible payments you may not have claimed.
We’re happy to help you keep your taxes as low as possible if you’re a business owner. Your taxes are calculated based on your net income.
To reduce your tax bill, you can offset some business expenses and claim back the tax, as long as you keep good records and have receipts to prove the payment. The more costs you claim, the less you have to pay as taxes. Sound good?
Let’s dive into a list of purchases you can claim back, with some tips and advice to follow when you finally claim your tax deductibles.
01. Vehicle Expenses, Transport Costs and Travel for Business Purposes
Travelling is a major part of running a successful business which also adds a big chunk of expenses to the cost of running a business. As a business owner, you can claim taxes on travelling to ease the burden of your travelling expenses.
Pro Tip: If your travelling involves business and pleasure, make sure only to claim the business part of the trip.
02. Working from Home / Home Office Expenses
Are you using your own property to run your business and using it as an office? You can claim a portion of your household expenses, including power ,house insurance, and mortgage interest. If you’re renting the property, you can claim the rent. You must keep invoices for these expenses.
Pro Tip: If you use a separate landline for your business purposes, it is 100% deductible. If your land phone line is used for business and private use, only 50% is deductible from the total bill.
03. Vehicle Expenses
If you’re using a vehicle for business purposes, you can claim the running cost. If you’re using your vehicle for both business and other purposes, you can still claim the business portion.
Pro Tip: Keep a log for a minimum of 90 days every three years, showing distances, dates and business reasons.
04. Charitable Donations
If your business participates in charitable activities, you can deduct the donation amount from your income.
Pro Tip: Keep any receipts and invoices for donations you make over $5.
05. Entertainment Expenses
Organising meetings and entertaining your business associates is not a burden anymore as you can claim those expenses if they were strictly business.
Pro Tip: Always consult your advisor in case you have doubts about this sort of payment.
06. Depreciation of Assets
Small businesses often miss out on claiming depreciation on their assets. You’re required to claim depreciation when you acquire an asset for your business and account for it when you dispose of that asset.
Pro Tip: In New Zealand, the depreciation rate is 50%, and businesses claim this on their assets such as computers.
07. Membership in Professional Associations
Businesses that require being members of professional associations carry a cost for the memberships. This is effective for the Information Technology sector, medical sector, manufacturing sector, etc. Your membership is tax-deductible in New Zealand.
08. Rent Paid on Business Premises
If you’re not working from your home office and maintain an office space, your rent paid on the business premises is tax-deductible.
09. Tax Agents’ Fee
A trustworthy and efficient agent is a lifesaver for a small business. There can be many more ways to save money when you file. Tax agents’ fees are tax-deductible, which is a huge benefit.
10. Interest on Borrowing Money for the Business
Borrowing money is essential to running a business. New Zealand is helping such companies by making interest on lending money for business tax-deductible.
Keeping up with taxes
Taxes are a difficult topic to master. It is critical to keep track of all expenses incurred by the firm. New Zealand assists small enterprises by allowing tax deductions on many of these. Businesses will become more successful if owners can precisely implement their taxation policies while maintaining these deductibles.