There are few among us who don’t enjoy seeking out every possible legal tax claim. Two expert tax accountants share their insights into commonly overlooked small business tax deductions.
Claim your home office space
Roger Shackelford, Tax Partner with Baker Tilly Staples Rodway, based in Wellington, says there are the obvious tax deductions, like advertising and bank charges, but people often forget that, if they work from home, they may be able to claim a portion of their mortgage interest, rates and insurance.
Georgie Webber, a Chartered Accountant with Peat Johnson Murray in Auckland, agrees. To work out how much of your home office space you may be able to claim for, Webber says it’s important to establish how many square metres your home covers, and what percentage of the space constitutes your workspace.
“You may also be able to claim part of your utilities bills using this method,” she says. “And if you’re a tradie, and you use your garage to store tools and equipment you could claim that too.”
Deducting entertainment expenses
Meetings (including dinners outside of work hours) at which the main topic of conversation is business, may also be partially deductible, along with thank you gifts that you send to a client, Shackelford says. But it is worth checking with your tax advisor when in doubt on these sorts of expenses.
Subscriptions and memberships
Shackelford adds that expenses like subscriptions and memberships may also be business tax deductions. “For example, if you’re a member of the local golf club and you take your clients out with you every now and again, a proportion of the golf membership could be a legitimate business tax deduction,” he says.
Motor vehicle expenses
“In New Zealand, you can claim motor vehicle expenses if you’re using a motor vehicle for business. You need to complete a log book with the kilometres driven and the reason for the trip so you can claim the mileage. A bit more record keeping could give you additional tax deductions,” Shackelford says.
Depreciation of assets
“Some small businesses miss out on the depreciation expense if they don’t account for their asset purchases, like computers,” Webber says. “In New Zealand, it’s a 50% depreciation rate.”
“Lots of people go to networking groups and if there was a cost, like food or wine purchases, a percentage of that could be deductible,” Webber says.
“People who are GST-registered might be more likely to have an accountant,” says Webber. “But when they’re not registered and doing it all themselves, some expense claims might fall through the cracks, mainly because they’re not filing returns and claiming more regularly.”
She adds, “Another thing to watch out for is if you have, say, three bank accounts and a credit card you might miss a few deductions because you’re paying for stuff all over the show. It makes it a bit harder to collate your information.”
If any of these deductions sound like they might apply to your small business, speak to your tax advisor for personalised advice on what your business might be eligible to claim.
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