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Sole Trader Guide — Self-Employed Tax and Business Structure in NZ

the sole trader business structure in New Zealand. The guide covers the sole trader registration (the IRD number, the GST, the KiwiSaver), the business income and the deductible expenses, the provisional tax payments, and the annual tax return (the IR3).

Sole Trader Basics

The sole trader is the simplest business structure in New Zealand. The individual operates the business under their own name or the registered trading name. The sole trader: (a) must register for the IRD number (the "IRD" for the tax purposes), (b) must register for the GST if the annual turnover exceeds $60,000 (or voluntarily), (c) must register the KiwiSaver as the employer for the personal contributions, (d) must register for the ACC (the "CoverPlus" for the self-employed), and (e) must file the IR3 annual tax return reporting the business income and the expenses.

Deductions and Provisional Tax

The sole trader can deduct the business expenses against the business income, including: (a) the home office expenses (the "proportion of the household costs"), (b) the vehicle expenses (the "IRD kilometre rate" of 0.95 cents per km or the logbook method), (c) the equipment and the tools (the "depreciation" or the "low-value asset write-off" up to $5,000), (d) the professional fees (the "accounting, the legal, the consulting"), and (e) the ACC levies (the "CoverPlus" levy). The sole trader pays the provisional tax if the residual income tax exceeds $5,000. See our Provisional Tax Guide → for the payment options.