The IRD mileage rate has decreased for the first time in memory from 77c per kilometre to 74c.
Every year the Commissioner of Inland Revenue publishes the mileage rate retrospectively as required by statute. This was done in August, 2015. The change impacts both diesel and petrol vehicles for the 2015 income year. The 2015 income year runs from 1 April, 2014 through to 31 March, 2015.
The Commissioner has justified the change based on lower fuel prices over the 2015 financial year and more fuel efficient vehicles.
The change will impact anyone who has business mileage less than 5,000 kilometres in a given financial year and choose to use the mileage rate.
In addition, the mileage rate is often used to assess the rate to reimburse staff and/or shareholder employees for the business use of their private motor vehicles. This is accepted practice by the IRD.
The IRD have stated that it is acceptable for taxpayers to use motor vehicle running cost data from other reputable sources such as the New Zealand Automobile Association.
What if you have already filed your 2015 return using the old rate?
Don’t worry. The Commissioner has stated that she does not propose to amend any returns that have already been filed.
What about Electric Vehicles, Hybrids and Motor Cycles?
The mileage rate does not apply in respect of motor cycles, hybrid and/or electric motor vehicles as 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. We assume this would include the cost of charging the vehicle in addition to any running costs.
It’s a useful reminded that if you elect to use another method based on actual costs, you are required to keep suitable records including invoices and receipts for fuel, servicing, WoF, registration, road user charges and the like.
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