If you're in business you can use this schedule instead of completing
a set of financial accounts. Partnerships and estates can also use this
schedule. Staple it to the top of page 3 of your tax return.
If your balance date is 31 March, work out your income and
expenses for the income year from 1 April to 31 March. If you're not
sure, contact your tax agent, or call us on 0800 377 774.
You must keep:
- books of accounts to record income, expenses, payments, wages,
assets and liabilities
- bank statements, invoices, receipts, and any other documents to
support entries in your account books.
You must keep your records for seven years. Keep all receipts and
invoices with your records in case we ask to see them later.
Motor vehicle records
If you use your car for business you must apportion your running
costs between business and private use.
To work out the business portion of the running costs, keep a
logbook for three months. You can then use the results for the next
three years, provided the business use of the car doesn't change by
more than 20%.
For each business trip write down in your logbook:
- the date
- the distance travelled for each business trip
- the reason for the trip.
Use the difference between the odometer readings for the start
and end of the three months to work out the percentage of vehicle
expenses you can claim.
Distance travelled for business 912 km
Total distance travelled in three months 1,600 km
In this case 57% of vehicle expenses can be claimed as a business
If you don't keep records for your vehicle we limit your claim for the
expenses and depreciation to a maximum of 25%.
Expenses when running a business from home
If you've set aside part of your home for business purposes, you
may be able to claim a portion of the costs of running your business
To claim these costs you have to set aside an area principally for
your business, such as an office or a storage area, and keep records
of the expenses you're claiming.
Work out the amount of expenses you can claim according to the
proportion of the floor area set aside for your business.
Expenses you can claim include insurance, rates, power and
mortgage interest payments.
You can also claim:
- a portion of the depreciation on your home and on some capital
items used principally for business purposes in your home eg
acomputer or office furniture and fittings
- up to 50% deduction for your domestic telephone line rental. If
you have both a commercial and a domestic line rental you can
claim the full cost of the commercial line but you can't claim any
portion of the domestic line.
Our booklet Smart business (IR320) explains how to calculate a
claim. You can order a copy at www.ird.govt.nz or by calling our
0800 self-service on 0800 257 773.
GST (Goods and services tax)
If you're registered for GST, don't include the GST portion of your
income and expenses when working out the net profit on this form.
Show the GST on your income and expenses in your GST returns.
If you aren't registered for GST include the total income and
expenses, including GST, when working out your net profit.
Filling in the IR3B
Sales - Box 1
This is the total sales or income earned from your main business
Cost of sales - Boxes 2 to 4
Opening stock is measured at the start of the income year (usually
1 April) and closing stock is measured at the end of the year (usually
31 March). "Purchases" is the cost of buying or producing goods for
Other income - Box 7
This is sales or income earned from sources other than your main
business activity, eg, interest on the business bank account.
Don't include schedular payments on the IR3B. Show any income
with tax from schedular payments deducted in your tax return. See
your tax return guide for notes about schedular payments.
Only the expenses you incur in generating your business income
are deductible for tax purposes. Apportion or exclude any personal
Accident compensation levies - Box 9
Include ACC levy payments for self-employment and as an
employer, and any interest charged.
Bad debts - Box 11
Show any debts not recovered which are actually written off.
Communication - Box 12
Includes telephone, mobile phone, fax and postage costs.
Depreciation - Box 13
This is the total tax deductible depreciation claimed for all business
assets. For more information see page 3.
Entertainment - Box 14
Some business entertainment expenses are only 50% deductible. For
more information read our booklet Entertainment expenses (IR268)
- it will also tell you which expenses are fully deductible. You can
order a copy at www.ird.govt.nz or by calling our 0800self-service
on 0800257 773.
Insurance - Box 16
Include all business insurance premiums. Exclude premiums for
private assets or personal life insurance. Claim premiums for loss of
earnings in your return.
Interest - Box 17
Include interest charged on bank accounts, hire purchase
agreements or term loans. Don't include loan repayments.
The information on this form is based on current tax laws at the time of printing.