Small Business Tax Dictionary
Deductible Portion
The deductible portion represents the percentage of home costs that can be claimed as business expenses in New Zealand. This encompasses portions of rent, mortgage interest, utilities, and related home expenditures.
How is the deductible portion calculated?
The percentage is typically determined by calculating either:
- The area of the home used for business purposes — for example, if your home office takes up 12% of your home's total floor area, you can claim 12% of eligible home costs
- The time allocated to work conducted in that space — useful for rooms used for both personal and business purposes at different times
What expenses can be included?
Common home expenses that can be partially deducted include:
- Rent payments or mortgage interest
- Electricity and heating
- Insurance premiums
- Rates and ground rent
Why understanding the deductible portion matters
Understanding the deductible portion is vital for:
- Accurately claiming home office deductions
- Complying with New Zealand tax regulations (administered by Inland Revenue / IRD)
- Ensuring fair allocation of costs between personal and business usage based on actual usage patterns