How to Reduce Your Tax Bill in New Zealand
- Sasha Curin
- Sep 11
- 3 min read
Paying tax is part of running a business, but many New Zealand business owners end up paying more than they need to. With careful planning and the right advice, you can legally reduce your tax bill, improve your cash flow, and reinvest more into your business.
At DC&A, we work with small and medium-sized businesses across New Zealand to make sure they don’t miss out on legitimate tax savings. This guide covers practical strategies you can use today.
1. Claim All Legitimate Business Expenses
If an expense is incurred to help your business earn income, it can usually be claimed. Common deductible costs include:
Home office expenses – A proportion of rent, mortgage interest, power, internet, insurance, and rates if you work from home.
Vehicle and travel costs – Fuel, maintenance, parking, and public transport for business trips. If a vehicle is used for both business and private purposes, expenses must be split. A logbook or IRD mileage rates make this straightforward.
Professional fees – Accountant fees, tax advice, and business-related legal costs.
Marketing and advertising – Website development, digital campaigns, and sponsorships that promote your business.
Staff costs – Wages, KiwiSaver contributions, training, and recruitment.
Expert tip: Keep invoices and clear notes. The more evidence you have, the easier it is to support claims if IRD ever asks.
2. Depreciation on Business Assets
Assets such as computers, machinery, or vehicles can’t be claimed in full at purchase. Instead, you claim a portion each year through depreciation (also known as wear and tear).
Example: A $2,000 printer can be depreciated at DV Rate of 40% per year.
Note: Assets costing less than $1,000 can be expensed at 100% in the first year of purchase
3. Tap Into Tax Credits and Incentives
New Zealand offers specific incentives to encourage investment and innovation:
R&D Tax Incentive – Businesses developing new or improved products, processes, or services may be eligible for a 15% tax credit on qualifying expenditure. If your credit is larger than your tax bill, or if you are in a tax loss position, you may be able to access a refund. There are eligibility rules and refund caps, so professional advice is recommended.
To see if your business qualifies for the R&D Tax Incentive, visit:
Loss carry-forwards – Business losses can often be carried forward to offset profits in future years, reducing tax when you return to profitability.
4. Keep Impeccable Records
Without records, you risk losing your deductions. Under the Tax Administration Act 1994, businesses must keep records for at least seven years.
Best practice includes:
Keeping all receipts, invoices, and bank statements.
Recording vehicle use and client entertainment details (date, purpose, attendees).
Using accounting software to track expenses and automate record storage.
5. Plan Ahead with Structure and Timing
Tax planning isn’t only about what you claim it’s also about when and how.
Timing expenses – Consider bringing forward deductible costs or asset purchases before year-end if cash flow allows.
Business structure – Whether you’re a sole trader, partnership, or company impacts how much tax you pay. Reviewing your structure as you grow can lead to significant savings.
Prepaid expenses – Certain prepayments (e.g. insurance, software subscriptions) can be deductible in the year they’re paid.
6. Commonly Missed Deductions
Even the most organised business owners sometimes miss smaller items that add up:
Professional memberships and trade subscriptions.
Low-value assets under $1,000, which may be claimed immediately.
Client entertainment — deductible at 50% if business-related.
Home office power, phone, and internet split between business and personal use.
Let Us Help You Reduce Your Tax Bill
There’s no one-size-fits-all approach to reducing a tax bill. Every business is different, and what works for one won’t necessarily suit another. That’s why tailored advice makes all the difference.
At DC&A, we help New Zealand businesses uncover missed deductions and plan ahead so tax works with their cash flow.
Ready to see what your business could be saving? Get in touch with us today we’d love to help.
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