Kilometre rates for the business use of vehicles for the 2020 income year
The table of rates for the 2019/2020 income year for motor vehicle expenditure claims.
In accordance with s DE 12(4) the Commissioner is required to set and publish kilometre rates. These rates can be used to calculate expenditure claims for the business use of a motor vehicle. They may also be used by employers as a reasonable estimate for reimbursement of expenditure incurred by employees for the use of a private motor vehicle for business purposes. More information is available on the Inland Revenue website www.ird.govt.nz (search keywords “claiming vehicle expenses”).
In Operational Statement OS 19/04 Kilometre rates for the business use of vehicles for the 2020 income year (OS 19/04) the Commissioner set interim rates for the 2019/2020 income year. At the time that OS 19/04 was published it was only possible to set interim rates because the Commissioner relies on third-party information to set the kilometre rates and that information was not then available to due to COVID-19. OS 19/04 advised that the 2019 kilometre rates would continue to apply until the required third-party information was available and a full review could be undertaken.
That review has now been completed. The rates set out below apply for the 2019/2020 income year for business motor vehicle expenditure claims. The tier one rates reflect a slight increase in vehicle ownership costs (such as insurance and registration charges). However, the tier two rates reflect a decrease in overall vehicle operating costs largely a reduction in the cost of fuel. Taxpayers that have filed their 2020 income tax returns using the interim rates that were released in OS 19/04, are able to request their return be reassessed to take into account these finalised kilometre rates, in terms of s 113 of the Tax Administration Act 1994.
The table of rates for the 2020 income year:
The Tier Two rate is for running costs only. Use the Tier Two rate for the business portion of any travel over 14,000 kms in a year.
|Vehicle type||Tier One rate||Tier Two rate|
|Petrol or diesel||82 cents||28 cents|
|Petrol hybrid||82 cents||17 cents|
|Electric||82 cents||9 cents|
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 provide further information on the use of the kilometre rates.