Small Business Tax Dictionary

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Square Meter Rate Rule (NZ IRD)

The Square Meter Rate Rule in New Zealand is a method used to calculate home office expenses based on the square meterage of the area used exclusively for business purposes. This rule allows individuals and businesses to determine the deductible portion of home expenses, such as rent, mortgage interest, utilities, and insurance, by measuring the floor area used for business activities and comparing it to the total area of the home. The resulting percentage is then applied to the relevant expenses to calculate the deductible amount. This method provides a clear and straightforward approach to apportioning home office costs, ensuring a fair and consistent allocation between personal and business use. Understanding and applying the Square Meter Rate Rule is essential for accurately claiming home office deductions in New Zealand and complying with local tax regulations. It supports the growth of small businesses and remote work by providing a tangible and practical way to recognize and alleviate the costs associated with maintaining a home office.