Each year IRD assesses the claimable mileage rate and for the second year in a row the rate has gone down. This is now 72 cents for the 2016 tax year, down from 74 cents for 2015 and 77 cents in 2014.
The rate applies to both diesel and petrol vehicles but not to motorcycles as these are not considered a common mode of transport for business purposes. In this case actual expenditure will need to be calculated and claimed.
IRD has announced that the reduction is largely due to lower average fuel costs and to some extent more efficient motor vehicles.
It remains unchanged that the mileage rate can be used for up to a maximum of 5,000 km of work-related travel per year. Greater than that means you must keep a record of actual vehicle expenses.
However if you are an employer reimbursing an employee you have the option of using the mileage rate to reimburse your employee if it is seen to be fair and reasonable; otherwise you will need to make an assessment to ensure your employee is fairly covered for their actual running costs.
If you believe your vehicle costs are higher than the rates given you can claim deductions on your actual costs including depreciation loss for the business use of your vehicle.
Logbooks
In order to assess your business running costs simply and accurately you should consider a logbook. These need to be kept annually for at least 90 consecutive days which then allows you to work out the average proportion of business to private use of your vehicle.
We have these available for $6.50 so feel free to contact us.
