The 2017 IRD mileage rate has just been released, and for the first time it includes rates for electric vehicles. This year this is a small increase to 73c per kilometre due for both petrol and diesel vehicles. The increase is due to higher average fuel costs during the 2017 income year and a slight increase in fixed vehicle costs.
Hybrid and Electric Vehicles
For the very first time, separate rates have also been introduced for hybrid and electric vehicles. For hybrid vehicles, the rate mirrors that for petrol and diesel vehicles. For electric vehicles, the mileage rate is 81c per kilometre.
The IRD doesn’t set a mileage rate for motorcycles as they maintain that motorcycles are not routinely used as a mode of transport for business. If you self-employed and use your bike for business, you’ll need to calculate your actual expenditure. If you are an employee, your employer may make a ‘reasonable estimate of the employee’s costs’.
When should I use this rate?
This rate can be used if your business travel is less than 5000km per annum in any given income year (1 April to 31 March). You have the option of using this rate, or actual costs if you think that the rate doesn’t fairly reflect the true costs of operating your vehicle. Of course if you want to opt for the actual costs method, make sure you keep all your records and can justify your method.
Do you have to use the IRD rate?
The answer is no. You could elect to use the rate set by the Automobile Association, or other reputable source.
What do I do if I’ve already used the 2016 rate?
There’s no need to adjust anything if you have filed your 2017 income tax returns using the 2016 mileage rate. The Commissioner will not adjust these returns. The 2017 rate should be applied from now on.
If you want to read the statement from the IRD in full, click here.