New Zealand

Employment expenses

Generally, no deduction is allowed for expenditure incurred in deriving employment income. It is therefore necessary that employers assess the correct tax treatment of allowances and expense reimbursements at payroll (PAYE) submission time.

Business deductions

Deductions are available for expenditure incurred in deriving assessable or excluded income (other than employment income) incurred in the course of carrying on a business. Subject to the entertainment expenditure provisions, certain entertainment expenditure is only 50% deductible.

The previous Government had enacted legislation that denies interest deductions incurred in relation to residential investment properties. These rules are intended to address housing affordability and promote greater owner-occupation of housing. The rules applied from 1 October 2021, with interest deductions phased out over time until they are disallowed completely. The rules include exemptions for interest incurred in relation to property development and 'new build' land, to promote the supply of new housing.

The new Government has reinstated interest deductibility in relation to residential properties. From 1 April 2024, interest deductibility is available for 80% of interest expenses incurred in relation to residential property. From 1 April 2025, interest expenses will be 100% deductible.

Personal deductions

No deduction is permitted for medical, superannuation, or insurance contributions. Certain insurance premiums may be allowed as a deduction under the general permission (i.e. loss of earnings).

Charitable contributions

Taxpayers are eligible for a tax credit for charitable donations/contributions made during the tax year. See the Other tax credits and incentives section for more information.