Use Personal Car for Business Purposes
If you’re a sole trader or in a partnership and you use your own vehicle in the business, you can claim the running costs for income tax.
If you use your own vehicle for both personal and business use, you’ll need to make an adjustment to claim the business-use portion for income tax. If you use the vehicle strictly for business only, you can claim the full running costs, without making any adjustments. If you use the vehicle to travel between home and work, or any personal travel, you’ll need to separate the running costs of your vehicle between business and private use. There are three options you can use – a vehicle logbook, a set mileage rate or using the actual cost.
If you decide to use a logbook, you must keep it for at least three months every three years to work out the business share of your running costs. You’ll need to record the distance, date and reason for the trip in the logbook. You can use the difference between the odometer readings at the start and end of the three months to work out the percentage of vehicle expenses you can claim.
You can use the result of your three months’ recording to claim the business share of your vehicle expenses over the next three years, provided your business use of the vehicle does not change by more than 20%.
You should still keep records of the total vehicle running costs and record the total distance travelled for the income tax year.
You can find a sample logbook and blank logbook in our Resources Page.
Alternatively, if you travel 5,000 km or less for business use in an income year, you may use Inland Revenue’s mileage rate of 77 cents a kilometre to make a claim on your vehicle. This mileage rate changes from time to time, please CONTACT US or check with IRD to confirm.
Actual expenditure (Not Recommended)
Instead of using the above mileage rate or logbook, you may claim deductions for the actual expenditure you incur. If you do this you must keep accurate records to work out the share of business use. Your records will need to show the reasons for the trip and the distance.
If you don’t keep a vehicle logbook, qualify to use the mileage rate or maintain actual expenditure records, you may claim the lesser of actual use or 25% of the vehicle running costs as a business expense. You could be asked to prove the percentage claimed.
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