If you’re sick of tracking every car expense for your business, Inland Revenue's kilometre rates offer a simple way to claim vehicle use costs.
How it works
· Charge per kilometre: You charge your business a set amount per kilometre driven for business purposes.
· Rates depend on distance and car type:
First 14,000km: $1.04 per kilometre (all vehicle types) More than 14,000km:
Thus if your business travel was say 12,000 km out of say 21,000 km you would take 12/21 of your 12,000 km = 6857 km and claim $1.04 per kilometre.
You would calculate your claim for the remaining 9000 km at the rate of $0.35 per kilometre If you had a petrol or diesel car.
Benefits of kilometre rates
Convenience: No need to track individual expenses like fuel and repairs.
Flexibility: Great for occasional business trips, like property visits.
Tracking kilometres
Record your odometer: Note your odometer reading on your business balance date (usually 31 March).
Check your distance: This helps determine if you've driven more than 14,000km in the year and need to use the two-tiered rate structure. Keep records of your business kilometres. A three-month logbook is allowed if it represents your annual travel, but you need to update it every three years.
Changing vehicles mid-year
Odometer readings: Record the readings when selling your old car and buying a new one to ensure accurate kilometre tracking for both vehicles.
Remember, kilometre rates simplify expense claims but might not match your exact expenses, which could be higher or lower. They make claiming business travel expenses easier and they're especially helpful for people with occasional business trips or who prefer simpler record-keeping.
