Hospitality business expenses in New Zealand: the complete guide for cafes, restaurants, bars and caterers

New Zealand keeps hospitality tax simpler than most countries on the sales side (one GST rate of 15%, no GST-free food) and more particular on the hosting side: the half-deduction rule for entertainment, and the GST adjustment that follows it. For an operator whose whole trade is food and drink, the core skill is knowing which of your own costs are stock, which are fully deductible entertainment, which are the 50% kind, and what the April 2026 changes to wages and KiwiSaver did to the cost of a shift. This guide goes through the whole ledger of a cafe, restaurant, bar or catering business, category by category, with a verdict for each one before the detail. Every figure is sourced to Inland Revenue or Employment New Zealand in the Sources section, retrieved 10 October 2026.

What this guide covers: food and beverage stock, GST on what you sell, wages, KiwiSaver and ACC, staff meals and functions, entertainment and the 50% rule, the GST adjustment, rent and utilities, licences and fines, delivery platforms, software and payment fees, kitchen equipment and the low-value threshold, uniforms and cleaning, vehicles and kilometre rates, provisional tax, and the GST return, records and year-end work that tie it together.

The hospitality ledger at a glance

The rest of this guide walks through each row, and every section opens with its verdict.

Where ExpenseFlow fits

A venue’s purchase ledger is high volume and low value: produce, meat, seafood, dairy, beverages, packaging, cleaning supplies, LPG, often several invoices a day across a dozen suppliers. ExpenseFlow captures each supplier invoice and receipt (email forward, upload or phone), reads the line items and the GST per line, codes each line to your chart of accounts with a written reason, and routes anything uncertain to a person before it posts. For New Zealand venues the checks that matter most are built in: a line taxed at a rate that is not 15% is flagged; a bank fee or interest charge coded with GST is flagged as an exempt financial service; the line-level GST is recomputed against the printed totals; and a line that reads as entertaining (a client dinner, a staff function) is flagged for the 50% decision rather than silently coded as a fully deductible meal, so your accountant has the split ready when the adjustment is due. After approval the bill syncs to Xero with the source document attached and the decision trail written to the bill’s history, or to QuickBooks Online as a coded bill.

What it does not do: it does not run payroll, KiwiSaver or ACC, it does not make the entertainment GST adjustment, it does not count stock, it does not touch the till, and it does not file your GST return. Those stay with you and your accountant. The matching hospitality chart of accounts for Xero and for QuickBooks give you account names that line up with the categories below.

The ExpenseFlow for hospitality businesses page covers these checks across all five countries.

Food and beverage stock

Ingredients, beverages, alcohol and packaging are the costs of the goods you sell, deductible in full, and because New Zealand has no GST-free food category every wholesaler line carries 15% that you claim with a tax invoice ^[8] . The entertainment rules never reach your stock: the 50% limit is about food and drink you provide to people, not food you sell them ^[1] . The one place stock meets the entertainment rules is when it leaves the kitchen for your own staff party or a supplier’s visit; then the cost of what was consumed follows the entertainment rule for that occasion, not the cost-of-sales rule.

GST on what you sell

GST is charged at 15% on most goods and services sold in New Zealand ^[8] , and nothing on a menu falls outside it. You must register once your turnover from a taxable activity was at least $60,000 in the last 12 months or you expect it to reach that in the next 12 months, and you must register regardless of turnover if you add GST to your prices ^[6] . The New Zealand GST guide covers the taxable supply information rules and the filing cycle, the GST return guide walks the return, and the GST calculator extracts the 15% from a GST-inclusive figure. Voluntary tips are rare in New Zealand; a service charge you add to the bill is part of the price and carries GST like the rest of it.

Wages, KiwiSaver and ACC

Wages are deductible through PAYE. From 1 April 2026 the adult minimum wage is $23.95 an hour, with starting-out and training rates of $19.16 ^[7] . On the same date the default employee and employer KiwiSaver contribution rates rise from 3% to 3.5%, employers must update payroll settings so the new rate applies to all pay days from 1 April, eligible 16 and 17 year olds qualify for employer contributions of 3.5%, and employees can apply to stay at 3% for three to twelve months, which the employer may choose to match; the default rises again to 4% on 1 April 2028 ^[5] . Employer KiwiSaver contributions are deductible, and the employer superannuation contribution tax deducted from them is part of the cost. ACC work levies, holiday pay and public holiday rates are set under their own Acts and are deductible employment costs; ACC and Employment New Zealand are the authorities on the figures.

Staff meals, functions and benefits

The meal the kitchen puts out before service is part of running a business that sells food; the cost is the stock, already in cost of sales. The staff Christmas party, the end-of-season dinner and the Saturday night drinks are different: food and drink you provide for social events such as parties, or in an area set aside for senior employees, is 50% deductible and not liable for FBT, and so are the supporting expenses for those events, such as hiring glasses and wait staff ^[1] . Light meals provided in a dining room for senior managers and consumed as part of their duties are the exception at 100% ^[1] . There is no second charge: entertainment that falls in the 50% bucket is outside FBT, so the half deduction is the whole adjustment ^[1] .

Client entertainment and the 50% rule

Inland Revenue splits entertainment into two buckets. Expenses that are not completely business related are 50% deductible and not liable for FBT: entertainment at sports or cultural events such as a corporate box, business use of a holiday home, hiring a boat and providing food and drink on it, food and drink for social events or for an area set aside for senior employees, gifts of food and drink that benefit the business but are enjoyed privately, and the supporting expenses for any of these ^[1] . Fully deductible are meals an employee buys while travelling on business (dropping to 50% if the meal is with an existing or potential business contact or is a celebration), light meals for senior managers consumed as part of their duties, and entertainment that promotes your business where the public has the same access ^[1] . For a venue, hosting a supplier, a reviewer or a prospective corporate client at your own tables lands in the 50% bucket; the business meals guide has worked examples.

The GST adjustment

The half-deduction rule reaches into GST. If you are registered, you deduct the full amount of your business-related entertainment expenses in Box 11 of the GST return along with your other expenses, and then make an annual adjustment in Box 9 for any entertainment that is only 50% deductible: take the non-deductible figure from your income tax return (which is GST-exclusive), multiply it by 0.15, and add that GST component to Box 9, on the earlier of the date your income tax return is due and the date you actually file it ^[2] . Inland Revenue’s own example is a supplier lunch claimed in full in the September GST return and adjusted the following June when the income tax return is filed ^[2] . That makes entertainment one of the few lines where the income tax and GST treatments are linked rather than separate, and it is why the 50% split needs to be visible in the ledger all year rather than reconstructed in March.

Rent, rates and utilities

Rent, power, gas, water and council rates are ordinary running costs, deductible in full, and a registered business claims the GST shown on each supplier’s taxable supply information ^[8] . A bond or deposit is not an expense until it is forfeited; it sits as an asset while the landlord holds it. Fit-out and make-good at the end of a lease are capital, claimed through depreciation rather than as rent.

Licences, permits and fines

The on-licence or off-licence fee under the Sale and Supply of Alcohol Act, the annual fee that follows it, food business registration and verification fees, and outdoor dining permits are costs of being allowed to trade, deductible in the year paid; claim GST on them where the invoice shows it. Fines and penalties for breaking a law, whether a late GST filing penalty or a food safety infringement, are not deductible.

Delivery platforms, software and payment fees

Delivery platform commissions, online ordering fees, booking systems, rostering and POS subscriptions and terminal rental are ordinary costs of earning income. The GST rule is the same as for stock: claim what a tax invoice shows and nothing more. Bank fees, interest and loan charges are financial services, which Inland Revenue lists among exempt supplies that are not subject to GST, so there is nothing to claim on them ^[10] ; merchant service fees and payment processor charges are taxable where the statement shows GST, which makes the bank-versus-merchant split the most common coding error in hospitality books. Platforms and software billed from overseas may or may not charge New Zealand GST; the GST guide covers when the remote services rules apply.

Kitchen equipment, fit-out and repairs

Espresso machines, ovens, refrigeration, dishwashers and furniture are capital. The low-value asset threshold has been $1,000 since 17 March 2021: an asset at or under it can be deducted immediately instead of being depreciated over its life, and if you are registered for GST you work from the price less the GST charged ^[3] . Separately, a new (or new-to-New Zealand) depreciable asset first available on or after 22 May 2025 qualifies for Investment Boost: 20% of its cost is deducted upfront and the remaining 80% is depreciated ^[11] . Assets above the threshold are depreciated at the rate Inland Revenue sets for the asset class, and pooled assets cannot be buildings and cannot be taken out of the pool once in ^[3] . Repairs that keep equipment in its existing condition are deductible as incurred; a refit that creates something better is capital. The equipment guide sets out the depreciation methods and the depreciation glossary entry explains the mechanics.

Uniforms, laundry, cleaning and pest control

Branded uniforms you supply and launder are a cost of running the venue, deductible with the 15% claimable from the supplier’s tax invoice ^[8] . Cleaning contracts, pest control, grease trap servicing and waste collection are the same. Where staff buy and launder their own distinctive uniform, a reimbursement of the actual cost is a deductible employment cost; a flat clothing allowance is pay.

Vehicles, delivery and kilometre rates

A catering van or delivery vehicle is claimed either on actual costs apportioned by a logbook, or at Inland Revenue’s kilometre rates. For the 2025-2026 income year the Tier 1 rates, which cover fixed and running costs and apply to the business share of the first 14,000 km the vehicle travels in the year including private use, are $1.20 for petrol, $1.30 for diesel, 90 cents for a petrol hybrid and $1.22 for an electric vehicle; once total travel passes 14,000 km the Tier 2 rates of 37, 38, 24 and 23 cents apply to business kilometres ^[4] . The vehicle and mileage guides have the method choice and the records, and the mileage log template carries the logbook.

Marketing, insurance, bank costs and the small stuff

Advertising, loyalty schemes, insurance, bank fees, interest on money borrowed for the business, freight and the stream of small purchases every kitchen makes are ordinary deductible costs. Insurance, advertising and freight carry GST; bank fees and interest are exempt supplies with nothing to claim ^[10] .

Provisional tax, GST return, records and year end

Provisional tax applies once your residual income tax for the year is more than $5,000 ^[9] , which catches most growing hospitality businesses by their second profitable year; the tax deadlines calendar has the instalment dates alongside the GST and PAYE ones. Every GST claim rests on taxable supply information from the supplier, and business records are kept for seven years, as the record-keeping guide sets out. Keep the entertainment split (100%, 50%, cost of sales) visible in the ledger all year so the GST adjustment and the income tax add-back are a report, not a reconstruction, and use the year-end checklist to walk the close.

Common mistakes

• Claiming 100% of a staff party or a supplier dinner that is limited to 50% ^[1] .
• Forgetting the GST adjustment on the non-deductible half of entertainment ^[2] .
• Applying the 50% rule to stock served to paying customers, which is cost of sales ^[1] .
• Coding bank fees and interest with GST, or merchant fees without it.
• Depreciating a $900 blender instead of writing it off as a low-value asset ^[3] .
• Running payroll at 3% KiwiSaver after 1 April 2026, or leaving 16 and 17 year olds out ^[5] .
• Paying the old minimum wage after 1 April 2026 ^[7] .
• Leaving GST registration until after turnover has already passed $60,000 ^[6] .
• Using last year’s kilometre rates on this year’s claim ^[4] .