Is my vehicle claimable?
Using your OWN vehicle in your business
If you use your own vehicle in the business, you can claim the running costs.
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.
If you use the vehicle strictly for business only, you can claim the full running costs. 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.
When a company owns a car, it claims all the expenses without making a private-use adjustment. The company must pay fringe benefit tax (FBT) if a vehicle is available for private use by employees or shareholder-employees.
a) Kilometre Rates
If you travel 5,000 km or less for business use in a financial year, you can use Inland Revenue’s mileage rate of 72 cents a kilometre for your business use claim. This rate is set by the IRD and can change from year to year.
Find out more about mileage rates for self-employed people and reimbursing employees –
b) Actual expenditure
If you believe your vehicle costs are higher than the rates given you can use the actual costs option.
You can claim deductions on your actual costs including depreciation loss for the business use of your motor vehicle. If you use this method you must keep accurate records including details of private and work-related expenses. Your records will need to show the reasons for and the distances of journeys for business travel.
You can also work out the business use of your vehicle by keeping a logbook for at least 90 consecutive days. After 90 days you can work out the average proportion of business to private use of your vehicle. The logbook term Is up to three years, provided variance of business use is less than 20% of the logbook representation.
The logbook must record the:
- Start and end of the 90-day test period
- Vehicle’s odometer readings at the start and end of the test period
- Distance of each business journey
- Date of each business journey
- Reason for each business journey, and
- Any other detail that we may require.
Your Tax Agent can use your logbook to calculate the deduction for the costs you incur and the amount of depreciation loss for the business use of your motor vehicle.
LOG BOOK EXAMPLE
Name__________________________ Vehicle Rego ___________________________
Start Date ______________________ Start Odometer Reading ___________________
End Date _______________________ End Odometer Reading ____________________
|Date||Business Purpose||Start Odometer||End Odometer||Km’s||Notes|
|1/1/14||Sales call to ABC Widgets||1002||1056||54||From Office to ABC Widgets and back. Called on Mike Moss, VP|
If you need further info or discussions on this, contact your trusted business adviser. If you don’t have one, give us a bell.