Business and Expenses GST: claiming costs the IRD way

Business and Expenses GST is our hub for the GST that sits on your costs and your income lines, not just the 15% on a simple quote. It covers what you can claim, when you cannot claim the full amount, and the timing traps on deposits, unpaid invoices, and staff spend.

This page is for New Zealand businesses and contractors in the 2026/27 tax year (1 April 2026 to 31 March 2027). Below is the practical map Inland Revenue (IRD) expects you to follow, then the detailed posts listed under this category.

Claiming GST on business purchases

On IRD’s claiming GST page, input tax is the GST you are charged on supplies used in your taxable activity. You subtract that from the GST you charge (output tax) to work out what you pay or get refunded. The standard rate is still 15%.

You must hold taxable supply information for supplies you receive. Buying from an unregistered person usually means no GST to claim, unless a special rule applies (for example some secondhand goods credits). Private use and exempt use reduce what you can claim. Mixed use is covered under apportionment and change in use on IRD’s adjustments pages.

For quick exclusive or inclusive maths on a cost, use the free GST calculator. Keep supplier documents tidy with the GST invoice generator when you are the seller. Basics and registration sit in the GST Guide NZ category and the $60,000 GST threshold guide.

Entertainment expenses and the 50% rule

Many business entertainment costs are only 50% deductible for income tax. IRD’s entertainment guide IR268 and the other GST debit adjustments page explain the GST side.

If you are GST registered, you usually claim the full GST on business related entertainment through the year (purchases box), then make an annual adjustment for the half that is not deductible. Timing of that adjustment depends on when your income tax return is due or filed, and whether you use a tax agent. Employee contributions to entertainment are treated as a separate supply. Worked detail: entertainment expenses: the 50% rule.

Staff reimbursements

When staff pay for a business cost and you reimburse them, GST claimability follows the nature of the underlying spend and the records you hold. Entertainment reimbursements follow the same 50% or 100% pattern as IR268. Ordinary business purchases need taxable supply information in the right name where the value rules require it. Step by step: claiming GST on staff reimbursements. Employer fringe benefits on top of salary are a different tax: use the FBT calculator.

Bad debts written off

If you accounted for GST on a sale and later write off all or part of the amount as a bad debt, IRD’s other GST credit adjustments page lets you claim a credit adjustment of 3/23 of the amount written off in that period. Keep a record of the recovery steps you took. You do not send those papers in with the return.

On the payments basis, if you never included the unpaid sale in a return, there is usually nothing to claim back when you write it off (with limited exceptions such as some hire purchase and door to door sales). If you later recover a debt you already claimed, you must put 3/23 of the recovery back as a debit adjustment. Guide: GST on bad debts. Accounting basis choice is explained in invoice basis vs payments basis.

Deposits, progress payments, hire purchase and leases

Timing of output tax depends on your accounting basis and when the time of supply rules treat the sale as made. Deposits and progress claims are a common cashflow trap if you invoice early but get paid late, or the other way around. See GST on deposits and progress payments.

Hire purchase and finance leases split the cash price (which can include GST) from finance charges (generally exempt). IRD’s credit adjustments page notes that for hire purchase bad debts, GST is based on the cash price portion of instalments. Full walkthrough: hire purchase and leases. Buying versus leasing assets also sits in buying vs leasing assets in NZ.

Barter, sponsorship and donations

Swapping goods or services is still a supply. Open market value usually drives the GST figure even when no cash changes hands. See GST on barter and swaps.

Sponsorship that buys you advertising or another taxable benefit is treated differently from a pure donation. Getting that wrong affects both output tax and what the other party can claim. Compare the two in GST on sponsorship vs donations.

Income side: contractors, employees and case studies

Expense claims only make sense if you know whether you are collecting GST on sales at all. Staff wages use PAYE. Contractors who invoice often need GST once turnover crosses the threshold, and may also have withholding on invoices. Read contractors vs employees: the GST trap and the worked comparison in retail vs contractor GST.

Tools that pair with this category: withholding tax calculator, self employed tax calculator, PAYE calculator, and the provisional tax calculator when residual income tax pushes you onto instalments. Filing walkthrough: how to file your GST return in myIR. Late payment estimates: late GST penalty calculator.

Where related topics sit

Cars, home office and change of use adjustments lean into the property and assets GST category, including claiming GST on a car or home office. Grouping, reverse charge and audits sit under Advanced GST Rules. Industry examples live in industry specific GST. Common claim mistakes are listed in 10 common GST mistakes in NZ.

What this Business and Expenses GST page is checked against

Last full check: 25 August 2026. Claiming rules, entertainment adjustments, bad debt 3/23 credits, and taxable supply information were matched to IRD claiming GST, other GST credit and debit adjustments, IR268, and GST guide IR375. GSTCalc.nz is a free New Zealand publisher of tax calculators and guides. Ads may fund the site. We are not Inland Revenue and this is not tax advice. Figures are working papers.

Publisher details: About us and Contact. Privacy: Privacy policy. The articles listed below this description are the detailed Business and Expenses GST posts.