Quick answer
Self-employed people claim the business share of home broadband on an evidenced basis; a dedicated business connection is fully deductible. Employees cannot claim internet at all in New Zealand; employers reimburse instead under Determination EE004, up to 75% of the plan where work use predominates or $7 a week with no evidence. GST-registered businesses claim the 15% GST on the business share of their own bills.
Is internet tax deductible in New Zealand?
For a business, yes to the extent it earns the income. A sole trader or partnership running the business from home apportions the broadband bill between business and household use and deducts the business slice; the general permission and its private-use limitation do the legal work, and the evidence does the practical work. Reasonable bases include time online for business as a share of the household’s total, the pattern of a representative period, or data attribution where the router reports it. The claim usually travels alongside the wider home office claim, though the two use different apportionment logic: floor area for the house, usage for the connection.
Employees are in a different regime entirely. New Zealand’s employment-income limitation bars employee deductions, so the internet question becomes an employer question, answered by the same EE004 determination that governs phone reimbursements: a $7 a week telecommunications safe harbour (inside the $27 weekly combined amount with home-working costs), or up to 75% of the plan where it is principally used for the job, on evidence or a signed declaration.
How much can you claim?
Sole trader worked example: a web designer pays $95 a month for fibre. Her records over a representative month show business use at 55% of household usage. The annual deduction is $95 x 12 x 55%, which is $627. Her home office claim runs separately at the floor-area percentage.
Employer worked example: a firm’s remote administrator works from home three days a week on her own fibre plan. The firm pays the EE004 safe harbour of $7 a week for telecommunications plus the $20 home-working amount, $27 a week in total, exempt to her and deductible to the firm, with no evidence file to maintain.
| Situation | Treatment |
|---|---|
| Sole trader home broadband | Business share by usage, evidenced |
| Dedicated business connection | Fully deductible, full GST |
| Employee’s own broadband | No deduction; employer may reimburse under EE004 |
| EE004 safe harbour | $7/week telecom (within $27 total), exempt |
| EE004 principally business | Up to 75% of the plan, exempt |
GST on internet costs
The 15% input tax follows the business share of bills the business itself incurs: full on a business-premises connection, proportional on a shared home line, always from a tax invoice. EE004 reimbursements are outside the GST net. Keep the GST return’s percentage aligned with the income tax claim; divergent stories between the two returns are the sort of thing a review notices first.
Record-keeping requirements
Seven years: the bills, the apportionment workings and the representative-period evidence behind the percentage, and for employers the EE004 declarations or safe harbour elections per employee. The apportionment note matters more than its sophistication; a written basis applied consistently beats a precise-looking number with nothing behind it.
How to claim, step by step
- Classify the connection: dedicated business line, shared home line (apportion), or an employee’s own (EE004 only).
- Sole traders: set the business percentage from a representative period, write the basis down, and apply it to the year’s bills.
- Enter the business share in the IR3 business expenses alongside the home office claim.
- Employers: pay the $7 a week safe harbour or up to 75% under the principally-business test, through payroll as exempt income.
- Claim the 15% GST on the business share of the business’s own bills.
- Keep bills, workings, and declarations for seven years.
Common mistakes
- An employee claiming broadband on a tax return, which NZ does not permit.
- Claiming 100% of a family connection.
- Internet and home office percentages telling contradictory stories with no explanation.
- Claiming GST on EE004 reimbursements.
- Paying more than the safe harbour with no principally-business evidence behind it.
Software that helps
- Hubdoc pulls the monthly broadband bill automatically so the evidence never lapses.
- ExpenseFlow captures the bill each month, applies the business-use split you configure and the GST treatment to the business share, and syncs it to Xero or QuickBooks with the bill attached.
- Dext handles the same capture across a practice’s whole client base.
FAQ
See the answered questions above for sole-trader apportionment, the employee limitation, EE004, home office links, and GST.
From ExpenseFlow
GST coding on autopilot
ExpenseFlow reads every receipt, assigns the right GST treatment and account code, and syncs to Xero or QuickBooks Online once you approve.