Changes to Mileage Rates and Claims

The rules for mileage claims have changed and been applied from 1 April 2017.

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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 and must be elected to be used.

The Inland Revenue kilometre rate has two tiers.  The tier one rate applies for the business portion of the first 14,000 kms travelled by the motor vehicle in a year, and is 76 cents per km.  The tier two rates apply to the business portion of any travel in excess of 14,000 kms, and these rates depend on the type of vehicle, as follows:

  • Petrol or diesel      26 cents
  • Petrol hybrid         18 cents
  • Electric                     9 cents

 

If you’re self-employed you can use:

  • the kilometre rate; or
  • actual costs

If you’re reimbursing an employee (including a shareholder-employee), you can use:

  • the kilometre rate;
  • NZ Automobile Association mileage rates; or
  • actual costs

If you’re a close company with shareholder-employees, you can use:

  • the kilometre rate (if the only fringe benefit provided is one or two motor vehicles to shareholder-employees)

 

The new calculations can be complicated so please get in touch with us for further details or to discuss the best option for you and your situation.

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