Can employees claim work expenses in New Zealand?
No. If you earn a salary or wages in New Zealand, you cannot claim a tax deduction for work-related expenses, whatever your job and however much you spend.
The rule is section DA 2(4) of the Income Tax Act 2007, called the employment limitation. It denies a deduction for expenditure "to the extent to which it is incurred by you in deriving income from employment", and it overrides the general permission that lets businesses deduct their costs.
That catches the things employees in other countries often claim:
- uniforms, protective gear and work clothing
- tools and equipment you buy for your job
- home office costs when you work from home
- travel between jobsites, parking, and a car you use for work
- professional memberships, courses and subscriptions
What employees can claim
Inland Revenue lists the non-business expenses an individual can claim:
- the cost of having someone complete and file your income tax return
- income protection insurance premiums, if the payout would be taxable
- commission charged on your interest and dividend income, but not bank fees
- interest on money borrowed to buy shares or invest, if the investment produces taxable income
- interest paid to Inland Revenue for late payment of tax
You claim these in your end-of-year assessment, in myIR, in the year you paid them.
Donations are separate. A donation of $5 or more to an approved organisation earns a tax credit of one-third of the amount, up to your taxable income, claimed on form IR526 within four tax years of the donation. Keep the donation receipts: they are the claim.
The route that does work: your employer
The employment limitation stops you deducting work costs. It does not stop your employer covering them.
- Reimbursements. An employer can pay you back for actual expenses you incurred doing your job, and the reimbursement is not taxable. It is usually paid against a receipt. Any amount over the actual cost is taxable.
- Allowances. Where a cost recurs, an employer can pay a regular allowance instead. A tax-free allowance has to be a reasonable estimate of the real cost.
Either way, the receipt is what gets you paid, so keep it until your employer has reimbursed you.
Contractors are different
The employment limitation applies to income from employment. If you are genuinely self-employed, you are in business and the ordinary deduction rules apply to you.
That includes many people who think of themselves as workers rather than businesses: contractors in construction, IT, cleaning and similar trades who are paid schedular payments with tax deducted at source. The tax taken off each payment is a credit against your year's tax, not the end of the story. You file an IR3, claim your business expenses, and Inland Revenue works out the balance.
If you are a contractor, the receipts matter a great deal. Keep them for seven years, and read what to do when one goes missing.
Whether someone is an employee or a contractor depends on the real relationship, not the label on the agreement. If you are unsure, check with Inland Revenue or a tax adviser before you claim.
Sources
Common questions
Can I claim uniforms, tools or a home office as an employee in New Zealand?
No. Section DA 2(4) of the Income Tax Act 2007, the employment limitation, denies a deduction for expenditure incurred in deriving income from employment. That covers uniforms, tools, home office costs and travel for a salary or wage job.
What can an employee claim on their tax in New Zealand?
A short list of non-business expenses: the cost of having your tax return prepared, income protection insurance premiums where the payout would be taxable, commission on interest and dividend income, interest on money borrowed to invest, and interest paid to Inland Revenue for late payment. Donations earn a separate tax credit.
Can my employer pay me back for work expenses tax-free?
Yes. An employer can reimburse actual expenses you paid while doing your job without tax, usually against a receipt. Any amount paid over the actual cost is taxable.
I'm a contractor. Can I claim expenses?
If you are genuinely self-employed, including a contractor paid schedular payments with tax deducted, you are in business and can claim business expenses. The employment limitation applies only to employment income.
How much is the donation tax credit?
One-third of eligible donations of $5 or more, up to your taxable income, claimed on form IR526. You can submit a receipt within four tax years of the donation.
Every figure on this page is checked against Inland Revenue's own guidance and linked in the sources above. Last checked . Thresholds change each tax year, so if you are reading this well after that date, confirm the current figures before you rely on them. Terms.
Keep reading
Can you claim business expenses without receipts in New Zealand?
Sometimes, but the burden of proof is on you. What Inland Revenue expects, what can stand in for a lost receipt, and why GST claims need more.
ReadNew Zealand tax year dates and deadlines
The NZ tax year runs 1 April to 31 March. When your IR3 is due, when tax is due, provisional tax dates, and the GST return dates that break the pattern.
ReadHow long do you need to keep receipts for Inland Revenue?
Seven years after the end of the tax year they relate to. What counts as a business record, when the clock starts, and where the records must be kept.
Read