OS 19/04 (KM 2020)
15 May 2020

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.

Tax Information Bulletin Vol 32 No 5 June 2020

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.

In accordance with Section DE 12 of the Income Tax Act 2007, the Commissioner can to set the kilometre rates for the business use of vehicles as an alternative method for business to claim motor vehicle running costs.  As the Commissioner relies on third-party information to set the kilometre rates and that information is not yet available to us due to COVID-19, we cannot review the present rates.  The 2019 kilometre rates will continue to apply for the time being.  

We will review the rate once we get the information from our third-party.  Meantime, taxpayers can file returns and if there is a material change once we do set the new rates, they may adjust their 2020 motor vehicle expense claims under s 113 or s 113A.  

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, until these rates are reviewed. 

The current rates are:

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

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.