This document provides a step-by-step guide for small business owners to claim tax deductions on home office expenses using Xero. It outlines how to find, calculate, and import eligible expenses from receipts, bank statements, or expense tracking apps into Xero. It then explains how to reimburse yourself for the expenses through Xero, which is treated as a tax-exempt business expense. Finally, it discusses completing and filing your GST return in Xero to claim tax credits for your home office expenses.

1. Step Guide
How to claim tax
deductions on
home office expenses
using Xero
Receive GST credits and a tax exempt cash
contribution toward your costs of living, by using
Xero to regularly reimburse yourself for expenses
incurred when using your home for business
purposes.
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2. Why should you care?
With rising costs of living, waiting till
the end of the financial year to claim
home office expenses means missing
out on cashflow when you need it.
What can you claim?
A percentage of costs like power, rates, or rent, depending
how much you use your home for business.
Read IRD guidelines here
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3. Find, calculate and import expenses
into Xero
Reimburse yourself with a tax exempt
payment
File a return with IRD to claim GST
credits
3 easy steps
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4. Use an expenses app
Scan receipts one at a time with apps like Dext
or Xero Expenses, or..
Download bank statements
Export statements to Excel to find and calculate
expenses, or..
Use a personal finance app
Find eligible expenses from apps like
Pocketsmith or CashNav
Submit home office expenses
into Xero manually
Enter expenses into a Xero bill
Calculate eligible % (quantity) and tax
credit using a GST inclusive bill
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5. Submit home office expenses
into Xero automagically
Import a draft Xero bill
Download a report from Prosaic ready
for instant import into Xero
Use Prosaic app
Prosaic (www.prosaic.works)
connects to your personal
bank, data, in real time, using
AI to automatically find and
calculate eligible home office
deductions.
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6. Reimburse yourself for
home office expenses
Pay and reconcile the bill in Xero by transferring
funds from your business to personal bank
account.
As a business expense, there is no income
tax to pay on this cash contribution
toward your household costs.
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7. Complete and file your
GST return in Xero
Ready to file with IRD
File now
Finalise GST report
Reconcile any outstanding
transactions, and publish your
final return, including home
office expenses.
File with IRD
through Xero
Connect and file your
GST return with IRD
to claim tax credits
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8. Was this helpful?
Share with a small business owner you
know in the comments to help them too.
Or visit www.prosaic.works to use AI to
automate home office expenses.
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