When it comes to what you can claim as a business expense, we follow IRD guidelines. When claiming business expenses, you can only claim for expenses that you require for the functioning of your self-employed business. You cannot claim for expenses relating to your salary work.
Listed below are some of the main categories that IRD do not allow you to be claim as a business expense:
Any clothing that is worn as mixed use (i.e can be worn for personal or business purposes) cannot be claimed. This includes business suits and clothing purchased to protect from the elements.
The only exception to this, is if the clothing is to be branded with a company logo (we would also need to see an expense raised for the logo being added to the item of clothing), or the items of clothing is a mandatory requirement for Health & Safety purposes e.g. steel cap boots that are mandated to be worn on a building site.
You cannot claim for the cost of buying or repairing prescription glasses or contact lenses as these are considered private expenses. If you are required to wear sunglasses, and glasses with filtering and glare-reducing qualities similar to sunglasses, to protect you from the risk of illness or injury at work may be able to claim the work portion of this cost.
Any gym memberships (and other fitness expenses such as gym clothes, skipping ropes, weights and other fitness equipment), physio appointments or doctor’s appointments, are not claimable, even if they provide significant assistance to you being able to perform your work. This is the case even if you are required to pass medical examinations and fitness tests to maintain your employment.
Life and Health Insurance
Life & Health Insurances are not claimable as they are a personal insurance, rather than a business insurance (even if you are protecting against loss of income)
Rental bond is a deposit that is refunded when your tenancy ends, and therefore is not claimable.
You cannot claim for the cost of educating your children as this has no relevant connection with earning your employment income, and is a private expense.
A smart watch (that connects to a phone or other device to provide notifications, apps and GPS, for example) is a private expense and not claimable under ordinary circumstances. If you require some of the smart watch's functions as an essential part of your employment activities you may be able to claim the business proportion (you will need to be able to demonstrate the essential functionality that cannot be performed by using your phone)
Travel to your regular place of work
You cannot claim for transport expenses incurred in travelling between home and work as this is a private expense unless the nature of your job creates a practical necessity to transport bulky tools or work equipment by car between home and work. You can only claim transport expenses when you travel in the course of performing your employment duties e.g. a taxi for travelling to a client meeting.
Costs incurred for setting up own business
The costs associated with setting up a business are not considered claimable.
Legal costs when buying a new business
Legal costs are not considered claimable when buying a business, unless those legal costs are associated with the business purposes and do not exceed $10,000.