If you would like to claim vehicle expenses for your business and/or rental property you’re usually required to log vehicle use to justify this claim. Higher claims mean less tax to pay.
There are two ways to claim for vehicle use…
Mileage Claim
You can claim vehicle expenses using IRD’s reimbursing rate, (X cents per kilometre) but you’ll need to keep an ongoing log of ALL your business trips ALL year round. The total mileage will be claimed at the current year’s rate in your financial returns. It is not necessary to keep any motor vehicle expense receipts or invoices if using the mileage claim as the reimbursing rate is designed to cover these.
If claiming vehicle expenses using the mileage claim method, GST claims are not applicable.
The amount to claim is based on the rates for the financial year that you are preparing:
Rates for the 2022 – 2023 Year
Rates for the 2021 – 2022 Year
Actual Costs Claim
You can claim vehicle expenses including fuel, parts, repairs and maintenance, insurance, registration, depreciation and so on. You will need to log all your vehicle use for three months (once each three years) and identify usage as business or personal. The business use proportion is used to claim your motor vehicle expenses for the next three years, at which time you are required to keep another log for three months.
Tips
- If you have a busier time of year do 3 month logs then for a higher expense claim.
- Try to keep private use to a minimum while doing 3 month logs.
- Travelling from home to work is deemed as private use by IRD.
- Generally actual mileage works well for property and actual cost well for business.
- To make the process a little easier, we have free small printed vehicle log books available FREE for Kiwitax clients.
Fringe Benefit Tax (FBT) for Companies
For ordinary company owned vehicles which are available for private use, keep a log to record each full 24 hour day the vehicle is not available for private use (eg out of town, being serviced). These days will then be exempt from Fringe Benefit calculations.
There’s no need to keep an ongoing logbook of all travels in the vehicle but do keep all receipts and invoices for vehicle costs to claim. An FBT calculation will be done to account for 20% of the vehicles cost as private and all running costs can be claimed.
Claiming 100% of Motor Vehicle expenses
If you have a vehicle that is only used for business purposes, you can claim 100% of the running costs and depreciation as an expense.
Generally, you will need to have another vehicle available for private use, the business vehicle needs to be stored at the workplace and you should keep a logbook for 3 months to avoid paying FBT.
If unsure which claim method to use please contact us, we’re always happy to help.
Didn’t find the info you were looking for?
We have some other articles relating to motor vehicles you might find helpful:
Vehicle Ownership vs Vehicle Leasing Overview
Claiming GST on Secondhand Goods
Employee Vehicle Reimbursement
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