Can I Claim Staff Wages and Salaries (New Zealand) as a Business Expense in New Zealand?
Wages, salaries, bonuses, and employer KiwiSaver contributions paid to employees are fully deductible. The deduction is available in the year the wages are incurred, not necessarily when paid.
What Inland Revenue (IRD / Te Tari Taake) says
Section DB 31 of the Income Tax Act 2007. Wages paid wholly for the purposes of earning income are deductible. Employer KiwiSaver contributions at the compulsory rate (3%, rising to 3.5% from April 2026) are also fully deductible. ESCT withheld from employer KiwiSaver contributions is deductible as part of the overall employment cost.
When you can claim
- Gross salaries and wages paid to all employees for services rendered in the business
- Employer KiwiSaver contributions at the compulsory minimum rate (currently 3%)
- Bonuses and commission payments to employees for genuine business services
- ACC work account levies charged to the employer
When you cannot claim
- Wages paid to the owner-director that are inflated beyond a reasonable arm's length rate to reduce company tax
- Wages to associates or related parties that cannot be demonstrated as genuine and at market rates
Good to know
Pro tip: Holiday pay accrued but unpaid at year-end is deductible when the accrual meets the Income Tax Act timing rules — ensure your payroll software tracks this separately for tax purposes.
Related expenses
Stop guessing what you can claim in New Zealand
AccountsOS automatically categorises expenses with Inland Revenue (IRD / Te Tari Taake)-aware rules and tells you exactly what is claimable.
Try Free