What Can You Actually Claim as a Business Expense?
Two failure modes here, and they're equally expensive.
Claim too little and you pay tax on money you never really made. Claim things you shouldn't and you have a problem if anyone looks closely.
Most ecommerce owners err in the first direction — they under-claim, usually because they didn't realise something counted.
What's the basic test?
In both countries the principle is the same: an expense is deductible if it was incurred in earning your business income.
If it's partly personal, you claim the business portion. If it's entirely personal, you claim nothing — regardless of which account paid for it.
What can I definitely claim?
For a typical Shopify store:
Stock and inventory. The cost of goods you sell, including freight in, customs duty and import costs. This is your landed cost, and it's the biggest deduction most stores have.
Platform and software. Shopify subscription, apps, email platform, design tools, accounting software, hosting.
Payment and transaction fees. Shopify Payments, PayPal, Afterpay, Klarna, bank fees on the business account.
Advertising and marketing. Meta, Google, TikTok, influencer fees, content production, photography.
Shipping and fulfilment. Courier costs, 3PL fees, packaging, satchels, labels, tissue paper, thank-you cards.
Professional services. Accountant, bookkeeper, legal fees, business consultants.
Contractors and staff. Wages, contractor invoices, and associated obligations.
Insurance relevant to the business — product liability, contents, business interruption.
Bank interest and fees on business borrowing.
What about things I use for both business and personal?
These need apportioning, and they're where most under-claiming happens.
Home office. If you run the store from home, you can generally claim a portion of rent or mortgage interest, power, and internet — based on the area used for business and the proportion of use. Both IRD and the ATO publish methods for calculating this, including simplified rates.
Phone. Claim the business-use percentage. If it's genuinely 60% business, claim 60% — and be able to explain how you got there.
Vehicle. If you use your car for business — post office runs, supplier visits, markets — you can claim the business portion. Both countries offer a per-kilometre method and an actual-cost method. A logbook makes this far easier to defend.
Laptop and equipment. If used for both, apportion. Larger items may need to be depreciated over time rather than claimed in one year.
The pattern: claim the business share, and keep a basis for the split. An estimate you can explain is much better than not claiming at all.
What can't I claim?
Anything genuinely personal. Groceries, personal clothing, your own haircut — even if you're on camera for the brand.
Clothing, unless it's a uniform or genuinely protective. "I need to look good for Instagram" doesn't make it deductible.
Entertainment, at least not in full. Both countries restrict it and the rules are fiddly; assume partial at best.
Fines and penalties. Parking tickets, late filing penalties.
Drawings. Money you take out isn't an expense — see how to pay yourself.
The GST portion, if you're GST-registered. You claim that back through your GST return, so the deductible amount for income tax is the GST-exclusive figure. Claiming the full inclusive amount double-counts.
What records do I need?
Keep everything for seven years in both New Zealand and Australia.
Practically:
- Receipts and invoices — photos of paper ones are generally acceptable
- Bank and credit card statements
- A logbook for vehicle claims
- A basis for any apportionment you've made
Digital is fine and much easier to search than a shoebox. Most accounting software attaches receipt images to transactions, which is worth using.
The claim owners most often miss
Shipping costs, and it isn't close.
Not the courier bill — most people remember that. It's the gap between what you charged the customer for shipping and what you actually paid. Free shipping over a threshold, undercharged rural deliveries, and returns postage add up to a genuinely large number that many owners never quantify, because it never appears as a single line anywhere.
The same is true of per-order fulfilment costs generally. If you can see real shipping cost per order rather than a monthly lump sum, the picture changes. That's one of the things Rev Room pulls in for NZ and Australian stores — actual per-order shipping from Starshipit or GoSweetSpot, alongside COGS, ad spend and fees.
But you don't need software to fix this. You need to know the number.
The short answer
- The test is whether it was incurred in earning business income
- Stock, platform fees, payment fees, ads, shipping, packaging, professional services are all straightforwardly claimable
- Mixed-use costs — home office, phone, vehicle — are apportioned, and under-claimed far more often than over-claimed
- If GST-registered, claim the GST-exclusive amount for income tax
- Keep records for seven years
Related reading: Revenue vs profit · How much to set aside for GST and tax
General information only, current as at 20 August 2026. Deductibility depends on your circumstances and the rules change. Check ird.govt.nz or ato.gov.au and talk to your accountant.