If you pay for work clothes, travel, equipment or home-office costs out of your own pocket, you might expect to deduct those expenses from your taxable income. However, most employees in New Zealand cannot claim ordinary work-related expenses as personal tax deductions.
New Zealand's tax rules generally prevent employees from deducting costs incurred in earning salary or wages. This restriction is known as the employment limitation.
There are still some expenses you may be able to claim, particularly if they relate to investment income or other taxable income outside your employment. Your employer may also be able to reimburse qualifying work expenses without the payment being taxable.
Here is what you need to know before claiming expenses on your New Zealand tax return.
Can employees claim work expenses in New Zealand?
Generally, no. If you earn salary or wages as an employee, you cannot usually deduct the costs of doing your job from your employment income.
This applies even when an expense is necessary for your role or your employer expects you to pay for it yourself.
For example, buying a laptop to complete your work does not automatically make its cost tax-deductible. The same applies to work clothes, commuting costs and home-office expenses.
The key distinction is between claiming a tax deduction yourself and receiving a reimbursement from your employer. These are different processes with different tax rules.
| Expense | Can an employee usually claim it as a tax deduction? | What may be possible instead? |
|---|---|---|
| Work clothes or uniforms | No | Ask whether your employer provides or reimburses them |
| Tools and equipment | No | Request reimbursement for approved job-related purchases |
| Laptop or monitor for work | No | Check your employer's equipment or reimbursement policy |
| Home-office electricity and internet | No | Ask about a qualifying work-from-home reimbursement |
| Travel between home and work | Generally no | Check whether a particular employer-paid travel allowance qualifies for an exemption |
| Travel between work locations | Generally not as a personal employment deduction | Discuss reimbursement with your employer |
| Eligible tax-agent fees | Potentially | Claim the qualifying amount through your individual tax assessment |
| Eligible income-protection insurance | Potentially | Check whether the policy payout would be taxable |
| Qualifying investment-related expenses | Potentially | Check the rules for the income and investment involved |
The table provides general guidance. Whether an expense qualifies depends on your circumstances and the applicable tax rules.
1. Which expenses can employees claim on their tax return?
Although ordinary employment expenses are generally not deductible, some non-business expenses may qualify.
Inland Revenue lists several categories that people earning salary, wages or investment income may be able to claim.
Tax-agent or accountant fees
If you pay an accountant or tax agent to prepare and file your income tax return or assessment, the relevant cost may be deductible.
For example, if you pay a tax agent to help complete your individual tax assessment, you may be able to include the eligible fee when claiming non-business expenses.
Keep the invoice and make sure the expense relates to the relevant tax service.
Income-protection insurance
Some income-protection insurance premiums may be deductible if the policy's payout would be taxable.
This is not a rule that applies to every insurance policy. The treatment depends on the policy and the nature of the benefit.
If you are unsure, ask your insurer whether the payout would be taxable and confirm the deduction requirements before claiming the premium.
Commission on investment income
If you earn interest or dividends, certain commissions charged to earn that income may be deductible.
For example, a qualifying commission directly associated with earning dividend income may be eligible.
However, ordinary bank fees are excluded from this category under IRD guidance. You should also distinguish investment-related expenses from the personal costs of managing your everyday bank account.
Interest on money borrowed to invest
Interest on money borrowed to purchase shares or make other investments may be deductible if the investment is expected to produce taxable income and the relevant requirements are met.
For example, you might borrow money to purchase shares that generate taxable dividends. The interest may qualify for a deduction, depending on the circumstances.
Do not assume that interest on every investment loan is deductible. The purpose of the borrowing and the income involved matter.
Interest paid to Inland Revenue
Use-of-money interest paid to Inland Revenue for late tax payments may be deductible in the income year in which it was paid.
This is a specific category, not permission to deduct every penalty, fee or interest charge associated with your finances.
For the current list of eligible categories, consult Inland Revenue's guidance on non-business expenses (opens in a new tab).
2. Can you claim work-from-home expenses in New Zealand?
For an ordinary employee, working from home does not automatically make household expenses tax-deductible.
If you use your own electricity, internet, desk or computer to perform your employment duties, you generally cannot claim those costs as personal deductions against your salary.
This is a common source of confusion because self-employed people may be able to claim a business-related portion of qualifying home-office expenses.
The rules for employees are different.
What about electricity and internet?
Suppose you work from home three days a week and pay a higher electricity bill because you use your computer and heating during working hours.
You generally cannot claim that additional electricity cost as a personal tax deduction against your salary.
However, your employer may be able to reimburse qualifying additional costs under the rules for employee expense reimbursements.
Can your employer reimburse home-office costs?
Potentially, yes. Inland Revenue has rules covering reimbursements for expenses employees incur when working from home or using their personal telecommunications equipment and plans for work.
The tax treatment depends on the circumstances, the expense and whether the reimbursement meets the relevant requirements.
Ask your employer whether it offers a work-from-home allowance or reimbursement. If you receive one, check whether it is treated as a qualifying reimbursement or as taxable income.
3. Can you claim uniforms, tools and work equipment?
Generally, employees cannot deduct the cost of uniforms, tools or equipment they buy to perform their jobs.
For example, you might need safety boots for a construction role, specialist tools for a trade or a laptop for office work. Even if these items are necessary for your employment, their cost is not usually deductible from your salary.
That does not mean you must always bear the cost yourself.
Depending on your employment agreement and workplace policies, your employer may supply the items, pay for them directly or reimburse approved purchases.
Before buying expensive equipment, ask your manager or payroll team:
- Is the item supplied by the employer?
- Must the purchase be approved in advance?
- Will the employer reimburse the cost?
- Do you need to provide a receipt?
- Does the item need to be returned when you leave the job?
These questions can help you avoid paying for something that your employer would otherwise have supplied.
4. Can you claim travel and commuting expenses?
Ordinary travel between your home and your usual workplace is generally not tax-deductible for employees in New Zealand.
This remains the case even if public transport is expensive or driving is necessary to reach your workplace.
Travel required for your job is a separate issue, but employees generally cannot claim their employment expenses as personal tax deductions either.
Your employer may instead reimburse eligible work-related travel or pay an allowance. The tax treatment depends on the reason for the travel and the relevant rules.
For example, travel to another work location for a temporary work assignment may be treated differently from your usual journey between home and work.
If you regularly travel for work, keep receipts and travel records and ask your employer how those costs should be handled.
5. What is the difference between a tax deduction and an employer reimbursement?
Understanding this difference is one of the most useful things you can do before trying to claim work expenses.
A tax deduction reduces the income against which tax is calculated, where the deduction is permitted.
An employer reimbursement is a payment from your employer to cover an expense you incurred while doing your job. A qualifying reimbursement may be tax-free, but only when the relevant requirements are met.
Consider this example.
You buy $120 worth of approved supplies needed for a work task. Your employer agrees to reimburse you after you submit the receipt.
If the payment qualifies as a reimbursement under the tax rules, it may be paid without being treated as taxable income.
You would not then claim the same $120 as a personal tax deduction against your salary.
The important point is that reimbursement and tax deduction are not interchangeable. You should also avoid claiming the same expense twice.
Are all work allowances tax-free?
No. Some allowances are taxable, while qualifying reimbursements can be exempt from tax.
The treatment depends on what the payment covers and the rules that apply to it. A regular payment described as a work allowance is not automatically tax-free simply because it relates to your job.
If you receive a payment for travel, clothing, meals or working from home, ask your employer how it is treated through payroll.
You can also consult Inland Revenue's guidance on reimbursing employee expenses (opens in a new tab).
6. What if you are self-employed or work as a contractor?
Your tax position may be different if you are genuinely self-employed rather than an employee receiving salary or wages.
Self-employed people and eligible contractors can generally claim expenses incurred in earning their business income, provided the expenses meet the relevant requirements.
Depending on the work and circumstances, these may include:
- A business-related portion of home-office costs.
- Work-related phone and internet expenses.
- Business travel and vehicle costs.
- Tools, equipment and software.
- Professional services and accounting fees.
Private expenses cannot simply be claimed because you also use an item for work. If an expense has both business and personal uses, you generally need to calculate a reasonable business portion.
For example, if you use your internet connection for both client work and personal activities, you need a fair basis for separating the business use from private use.
Your employment status matters more than the job title you use. If you are unsure whether you are an employee or an independent contractor, confirm your status before claiming business expenses.
7. How do you claim eligible non-business expenses?
If you have qualifying expenses, you may be able to claim them through your individual income tax assessment in myIR.
The general process is:
- Check eligibility. Confirm that the expense falls within a deductible category.
- Gather evidence. Keep invoices, receipts and other records showing what you paid.
- Sign in to myIR. Open your individual income tax account.
- Complete the relevant return or assessment. Follow the instructions for claiming non-business expenses.
- Enter the eligible amount. Provide the required details and keep supporting evidence in case Inland Revenue asks for it.
- Review your assessment. Check the resulting tax calculation and keep a copy of the information submitted.
Do not enter ordinary work costs simply because they were necessary for your job. The employment limitation still applies.
If you have several income sources, investment income or an unusual expense, professional tax advice may help you determine what qualifies.
Frequently asked questions
Can I claim my work clothes on tax in New Zealand?
Generally, no. Employees cannot usually deduct the cost of work clothes or uniforms from their salary. Your employer may provide the clothing or reimburse qualifying expenses.
Can I claim my laptop if I use it for work?
An ordinary employee generally cannot claim a personal tax deduction for a laptop bought to perform employment duties. Ask your employer about supplying or reimbursing the equipment.
Can I claim internet costs if I work from home?
You generally cannot deduct home internet costs from your employment income. Your employer may be able to reimburse qualifying work-related costs under the applicable rules.
Can I claim petrol or parking costs for work?
Ordinary commuting costs are generally not deductible. Other work-related travel costs may be handled through employer reimbursement, depending on the circumstances.
Can I claim my accountant's fee?
The eligible cost of preparing and filing your income tax return or assessment may qualify as a non-business deduction. Keep the invoice and check the applicable requirements.
Are employee reimbursements taxable in New Zealand?
Some qualifying reimbursements can be tax-free. Other payments may be taxable, depending on what they cover and the relevant rules.
Can contractors claim work expenses?
Self-employed people and eligible contractors can generally claim qualifying business expenses against business income. They must separate private costs from business costs and meet the applicable requirements.
The bottom line
Most employees in New Zealand cannot claim ordinary work expenses, such as uniforms, equipment, commuting or home-office costs, as personal tax deductions against their salary.
However, certain non-business expenses may qualify, including eligible tax-agent fees, income-protection insurance premiums and some investment-related costs.
For expenses incurred while doing your job, an employer reimbursement may be the more relevant option. Ask your employer how work costs are handled and keep receipts for purchases you expect to be reimbursed.
If you are self-employed or a contractor, different deduction rules may apply.
Before submitting a tax claim, check that the expense is actually deductible under New Zealand rules. Spending money for work does not, by itself, make the expense tax-deductible.
