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.

As noted in the Deductions section of the Corporate tax summary, the new Government proposes to restore interest deductibility for residential properties on a ’phased-in‘ basis with full deductibility to apply from the 2025/26 income year.

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.