Paying wages to your spouse - can you claim a tax deduction?

All hands needed on deck? It can be a quick, easy decision to employ your spouse or partner. But be aware that if you are a sole trader or trade as a partnership, you cannot claim a tax deduction for wages paid to your spouse (or your civil union or de facto partner), unless Inland Revenue consents to it in writing.

You can apply for approval to deduct payments you have already made in an income year. You have up until you file your tax return to obtain approval. But it’s a better idea to apply before you start paying your spouse or partner.

Inland Revenue have certain requirements that must be satisfied before they approve your application, and your request must set out some key information.

If you gain consent from Inland Revenue but then subsequently increase the amount you pay your spouse or partner, you need to apply to Inland Revenue for their approval for the change.

These consents are not required if you trade through a company structure, but preparing the same documentation as would be required is still good practice.

Let us know if you intend to seek a tax deduction for wages paid to your spouse or partner. We can help with your application.

For more information, please get in touch to find out more and to discuss your specific circumstances.