Mileage Rate change

Mileage Rate change

Mileage Rate change

The IRD announced recently that for the second year running they have reviewed the mileage rate down.

In 2015, the IRD moved the mileage rate down from 77c per kilometre to 74c.

Effective for the 2016 tax the rate is now 72c per kilometre. The IRD have justified the reduction by stating that it is largely due to a lower average fuel costs during the 2016 income year (petrol $1.955 and diesel $1.178) coupled with overall lower operating costs on a more modern fleet.

The 2016 income year for business taxpayers with a standard 31 March balance date, runs from 1 April 2015 to 31 March 2016.

As in 2015, the Commissioner of Inland Revenue does not propose to amend the returns for taxpayers who have already filed their 2016 returns using the 2015 mileage rate.

It’s a timely reminder that the mileage rate does not apply in respect of motor cycles, hybrid and/or electric motor vehicles.

The IRD believe that these modes of transport are not commonly used for business purposes.  Any self-employed persons who use these forms of transport for business purposes will need to calculate their actual expenditure or in the situation of an employer reimbursement, they may make a reasonable estimate of the employee’s costs.

As always, you are free to use an alternative mileage rate estimate from another reputable source such as the NZ Automobile Association. These rates may in fact be lower than the IRD rates.

If you want to read the full release from IRD, please click on the link here.

 

Angus is the CEO and founder of Generate Accounting.

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