Home office claims

If you’re a business owner and use part of your family home for work, you can make a claim for this as a business expense. You can claim a portion of your household expenses, such as rates, insurance, power and mortgage interest. The portion you can claim relates to the area of your home that you use for business.

Splitting your household expenses

If part of your home is completely set aside for business use you just need to consider the floor area. If it is not completely set aside, you also need to consider the amount of time that part of your home is used for income-earning activities.

If you are registered for GST, the business expenses you claim will not include GST, when this applies. If you are not registered for GST, these expenses will include GST.

If you have a mortgage you can claim the same proportion of your mortgage interest (but not the principal) paid during the year. There is no GST involved in this.

For GST, you can claim a portion or percentage of the GST on the expenses. Like you do for any other business expenses you are claiming, you need to keep invoices and other records for these expenses.

Depreciation

You cannot claim depreciation on your home. Depreciation could be claimed before 1 April 2011 – if you did this, when you sell your home or stop using it for business purposes you will need to include the depreciation recovered in your tax return.

You can claim depreciation on capital items such as a computer, office furniture and fittings used for business purposes in your home.

Telephone costs

If you run your business from home, you can claim a deduction of 50% of the rental of a telephone landline if this is also your private line. Business-related toll calls are 100% deductible.

If you have a separate business line, you can claim the full cost of this for both income tax and GST. If you make any private calls on the business line and are charged for these, you will have to make an adjustment.

Internet costs

If you run your business from home and have an internet plan for both business and private use, you can claim part of this as a business expense.

You can decide how to work out the business proportion, but it needs to give a fair and reasonable result. You must also meet normal record-keeping requirements.

Square metre rate option

Instead of working out how much of your household expenses will be claimed by your business, you can use the square metre rate option. This uses a rate that we set each year based on the average cost of utilities per square metre of housing for the average New Zealand household.

This rate does not include premises costs of mortgage interest, rates or rent. You can also claim a portion of these based on the percentage of floor area used for the business.

The equation for the square metre rate option is: (a x b) + (c x d)

Where:

  • a is the total amount of mortgage interest, rates and rent you have paid during the year
  • b is the area calculated by c divided by the total floor area of your home
  • c is the total area (in square metres) of your home that is separately identifiable and used primarily for the business
  • d is the square metre rate that is published by Inland Revenue.

The square metre rate for the 2017–2018 income year is $41.10 per square metre. The square metre rate for the 2018–2019 income year is $41.70 per square metre. The square metre rate for the 2019-2020 year is $42.75 per square metre.

If you would like to talk to us about any of the above topics,
please fill in the form below or contact us directly here.

  • This field is for validation purposes and should be left unchanged.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. xero logo It’s small business accounting software that’s simple, smart and occasionally magical. Log in online anytime, anywhere on your Mac, PC, tablet or phone to get a real-time view of your cash flow. 
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. tax traders logo Tax Traders allows you to buy someone else’s tax to settle your account with Inland Revenue, as well as save on interest and late payment penalty charges.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. smart ar logo Astute cash flow management is essential for operating a small business.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. myob logo Trusted by 1.2 million businesses, myob is New Zealand’s largest accounting solutions provider. The platform is equipped to support the needs of New Zealand organisations.
As a client at Gilligan Sheppard you will access to international networks and resources to enable optimal outcomes for your business/trust/transaction.  accountancy insurance logo Tax Audit Insurance specifically designed for accountants in public practice. This provides cost effective protection and peace of mind against the substantial cost that may be incurred should IR or other government authorities conduct a random review, investigation or audit.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. cpa logo A CPA is a finance, accounting and business professional with a specific qualification. It indicates a soundness in depth, breadth and quality of accountancy knowledge and gives you competitive advantage over your peers.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. agn international logo AGN International is a worldwide asociation, composed of four regions, of independent accounting and advisory businesses.
Wealth & Succession Points to Note
An owner and director of a 150-year-old Auckland iconic business, an Auckland accountant who has been building, guiding, and governing businesses for at least 35 years, and two second-generation (G2) [...]
Led by a purpose of saving lives and livelihoods
Argus Fire Protection designs solutions to protect life, property, and assets from fire. Founded in 1981 as a sprinkler contracting company, it consisted of a few old vans and a team of five [...]
There is no new normal – business principles
Times of exuberance and despair pass. Times where capital or labour is scarce also pass. The constant through all of this is that individually, all humans seek to maximise their utility. For some [...]
Tanya’s secrets to problem-solving
How do you solve a problem like Maria? You can send her to live with a widower and his seven children in Austria, but most problems aren’t that easy to solve. Quite often we’ll come across a [...]
Changes to domestic trusts
The IRD has introduced changes to the annual reporting requirement for domestic trusts for the 2022 income tax year onwards. The reasons for the changes are to better understand and monitor the use [...]
Change is good!
Don’t fear new systems, IT, or learning new things! If the past couple of years has taught us anything, it is that we need to adapt quickly to ensure our businesses keep going and to [...]
How to write an article
Hopefully by now, with this series on content marketing (you’ve just started reading #5) you’ve boarded the content marketing train. Content marketing answers your audience’s questions and [...]
Richard’s April 2022 – May 2022 tax updates
Richard has had over 30 years’ experience with New Zealand and International taxation. His team provide services including: Q&A service for accountants Tax opinions IRD risk reviews and audits [...]
Land and the bright-line test – a beginner’s guide
It’s always good practice to commence a guidance article like the one you are about to read, with a disclaimer and a warning. Firstly, the writer has prepared this document purely from the [...]
The future of money
The United States seems to be getting more and more dysfunctional. Social media bubbles are creating more radical views and domestic terrorism and then got Trump elected president. There’s been a [...]

Click here for details.

We are recognised as authorities in our specialised fields. We publish newsletters with informed opinions that are free for you to subscribe to.

Click here for details.

We are recognised as authorities in our specialised fields. We publish newsletters with informed opinions that are free for you to subscribe to.