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Download the NZ expense policy (Word)A New Zealand expense policy has one distinctive feature that shapes how entertainment is handled: the 50% rule. Because many hospitality costs are only half deductible, the policy has to separate entertainment from ordinary subsistence so the limitation is applied correctly. Add the fuel-type-specific mileage rates and the usual structure of limits and evidence, and you have a document that keeps both spending and tax treatment in line. This template provides that structure ready to adapt.
The download is a sectioned policy: purpose, scope, the general principle, a row per category with the rule and limit, then approval, submission, and non-reimbursable items.
The general principle
The base rule is that a cost must be incurred in deriving income, with a record kept, and taxable supply information held for purchases over NZD 200 where GST is claimed. Stating this gives every category below a common standard and lets an approver reject a private or unevidenced cost.
The 50% entertainment rule
The row that defines a New Zealand policy is entertainment. Many business entertainment costs, meals out, functions, corporate hospitality, are only 50% deductible, with the remaining half disallowed because of the private element. If entertainment is mixed in with travel meals, the whole cost gets claimed and the 50% adjustment is missed. The policy should make entertainment its own category, so the bookkeeper applies the limitation rather than discovering it at year end.
There is a genuine distinction between entertainment and plain subsistence on a work trip, and the policy is where you draw it for your staff, so claims are coded consistently.
Mileage by fuel type
For staff using their own vehicle, the policy ties mileage to the IRD kilometre rates for the current income year. These differ by fuel type, so the policy requires the rate to match the vehicle: the diesel rate for a diesel ute, the hybrid rate for a plug-in hybrid, the electric rate for an EV. The Tier 1 rate applies to the first 14,000 km of total travel, with Tier 2 above. Phone and internet on personal plans are reimbursed at the business proportion.
How to use the template
- Set your accommodation caps and approval thresholds.
- Confirm how you distinguish entertainment from subsistence, and that entertainment is its own category.
- Confirm the mileage rates match the current income year and require fuel-type matching.
- Circulate and have staff acknowledge the policy.
Common mistakes
- Claiming the full cost of entertainment instead of applying the 50% limitation.
- Using one mileage rate for all vehicles regardless of fuel type.
- Reimbursing whole personal phone bills rather than the business proportion.
- Having no submission deadline, so claims land in the wrong period.
When the policy enforces itself
A written policy works best when its rules apply at capture. Tools that help:
- Hnry handles entertainment and GST treatment for sole traders automatically.
- ExpenseFlow reads each receipt, codes it to the right category (keeping entertainment separate so the 50% rule is applied), handles the GST, and posts it into Xero or QuickBooks Online, so the policy is enforced in the coding.
- Pleo sets card limits matched to the policy before the spend happens.
A policy works only if staff actually read it, so keep each row to a plain rule and a number rather than dense prose. Publish it where everyone can find it, have new starters acknowledge it on day one, and review it once a year against the current IRD kilometre rates so the figures stay accurate as the income year turns over.
Start from the template, set your limits, and let captured-at-source coding keep claims inside the policy.