News

Kilometre rate for business running of a motor vehicle

The Commissioner has issued a new Operational Statement 18/01 – Commissioner's statement on using a kilometre rate for business running of a motor vehicle.

This updates and replaces Operational Statement 09/01 - Commissioner’s statement of a mileage rate for expenditure incurred for business use of a motor vehicle, issued in May 2009.

The new rules allow the choice between using the cost method (which is based on keeping records of actual costs incurred) or a kilometre rate method, which has replaced the mileage rate method from 1 April 2017.

The kilometre rates which may be used to claim a deduction for motor vehicle expenses for the 2017-2018 income year are as follows:

Tier one is a combination of the vehicles fixed and running costs. It applies for the business portion of the first 14,000kms travelled by the motor vehicle in a year.

Tier two includes only the running costs. It applies for the business portion of any travel in excess of 14,000kms.

You can read the full operational statement on IRD’s website www.ird.govt.nz (search keywords: kilometre rate).

Source: www.ird.govt.nz