If you’re self-employed in Aotearoa, tracking your business expenses isn’t just good practice – it’s a way to (legally) pay less in tax. Every eligible expense you claim reduces your taxable income, which lowers your overall tax bill.
We’ve all lost track of spending and receipts before. The more organised you are, the more you stand to save.
Here’s what you need to know.
Why tracking expenses matters
When you claim a business expense as a tax deduction, you’re not getting a direct refund – you’re reducing the amount of income the IRD can tax. Less taxable income means a lower effective tax rate, which means a smaller tax bill at the end of the financial year.
For example, if you earn $75,000 and claim $7,000 in valid expenses, you’re only taxed on $68,000. That difference can add up to thousands of dollars in tax savings!
What can you claim?
As a sole trader, you can generally claim expenses that relate directly to earning your income or running your business. Some of the most common ones include:
- Motor vehicle costs (for business use)
- Equipment and tools
- Subscription and software fees
- Mobile phone bills (business portion)
- Home office costs, including rent, power, and internet
- Cost of goods sold
A few things to keep in mind: if an expense is for both personal and business use, you can only claim the business portion. Any asset costing more than $1,000 needs to be depreciated rather than claimed as a straightforward expense.
Keeping records for the IRD
The IRD requires you to hold onto receipts and records for seven years after purchase — yes, seven. That’s a lot of paper if you’re not organised about it!
Keeping clear, up-to-date records throughout the year is far less painful than trying to reconstruct everything at EOFY. At a minimum, you’ll want to store receipts (physically or digitally), note what each expense was for, and flag anything that’s partially personal use so you can calculate the right business percentage.
The easiest way to stay on top of it
The simplest approach is to log and record expenses you go, rather than saving it all for tax time. That way, nothing slips through the cracks.
Hnry makes this about as easy as it gets. You snap a photo of your receipt, raise it in the app, and the friendly Hnry team handles the rest – including calculating your tax savings, managing your claims, and storing your receipts for the full seven years. There’s even a Hnry Debit Card that automatically raises an expense every time you use it, so you’ll never accidentally miss a deduction again.
Sound good? Why not give Hnry a whirl?
