Understanding Business Income in NZ: What Counts and What Doesn’t?

June 05, 2025

Business income comes from selling products, investing, or running a company. Taxes depend on the type of income.

Some payments have taxes taken out first, like schedular payments. Other money—such as salaries, personal funding, or foreign pensions—is not business income.

What IS Business Income?

Business income is any money you earn from regular or planned activity intended to make a profit.

Important Tip: If it’s regular and part of your business activity, it’s likely taxable.

Common examples include:

🛠️ Selling goods or services: Physical products, food, crafts, consulting, etc.
👩‍💻 Freelance or contract work: Designers, writers, tradies, tech professionals.
🏠 Rental income: If part of a property business (not always taxable if casual).
📦 eCommerce sales: Selling online through Shopify, Trade Me, or Instagram.
🧾 Issued invoices: Even unpaid invoices count as income in the IRD’s eyes.

What ISN'T Business Income?

Not everything that enters your bank account is considered taxable income.

However: If your “gifts” or “prizes” are part of a marketing strategy or frequent, IRD may treat them differently. Context matters!

Examples that usually don’t count:

🎁 One-off gifts or donations: Birthday cash from Grandma? Not taxable.
💰 Private loans: Borrowing from a friend or the bank doesn’t count as income.
🏆 Prizes or lottery winnings: Unless you regularly enter contests as part of a business model.
📈 Capital gains/investments: Selling personal shares or property at a profit may fall under different rules.

Tip: Separate your income

Learn more

To learn more about business taxes, including taxable income, rates, deductions, GST, and filing requirements, visit the IRD website.

Source: IRD – Types of business income

Disclaimer:

For the most current tax rates and other information, please visit the official Inland Revenue (IRD) website. (Last updated: June 2025)

Need Help With Tax and Accounting?

DAD Accountant offers expert tax and accounting services for Kiwi businesses. Whether you’re starting out or growing fast, they’ll help you stay on track.

Get in touch with DAD Accountant today for support you can count on.

June 05, 2025