COVID-19: kilometre rates for the business use of vehicles
Instead of making a claim for the business use of a motor vehicle based on the actual costs, a taxpayer may elect to have a deduction for the business use portion based on a kilometre rate method. The Commissioner can set the kilometre rates for the business use of vehicles as an alternative method for a business to claim motor vehicle running costs.
Inland Revenue advised on 15 May 2020, that as the Commissioner relies on third-party information to set the kilometre rates and that information is not yet available to Inland Revenue due to COVID-19, the present rates cannot be reviewed. The 2019 kilometre rates will therefore continue to apply for the time being.
Inland Revenue will review the rate once further information is available from the third-party. In the meantime, taxpayers can file returns and if there is a material change once the new rates are set, taxpayers may adjust their 2020 motor vehicle expense claims under either ss 113 or 113A of the Tax Administration Act 1994.
Employers may continue to use the current rates as a reasonable estimate of expenditure incurred by an employee for the business use of a private motor vehicle under these rates are reviewed. The current rates are as follows:
Vehicle type Tier One rate Tier Two rate
Petrol or diesel 79 cents 30 cents
Petrol hybrid 79 cents 19 cents
Electric 79 cents 9 cents
For further information on the use of the kilometre rates, see Operational Statements OS 19/04A: “Commissioner’s statement on using a kilometre rate for business running of a motor vehicle – deductions” and OS 19/04B: “Commissioner’s statement on using a kilometre rate for employee reimbursement of a motor vehicle”.
Source document: Inland Revenue
©2020 CCH New Zealand Ltd