Did you know the IRD recently announced some changes in the way motor vehicle expense for business owners are calculated?
These changes may benefit you and potentially make your calculations easier.
Here are the key changes:
- There are new rates (as below). These apply to employees’ reimbursements from the 2018/2019 financial year. Remember, mileage reimbursements don’t have a GST component.
- You can now use mileage rates if you are a close company with shareholder-employees, and the only fringe benefit provided is the provision of one or two motor vehicles to shareholder employees for their private use. This applies to new arrangements only and if you choose to use them, you need to continue until that vehicle is disposed of or the company stops using it for business.
- There has also been an increase in kilometre rates for 2017/2018 and years following:
- For the first 14,000kms Petrol, diesel, hybrid and electric – 76 cents
- After 14,000kms
- Petrol or diesel – 26 cents
- Petrol hybrid – 18 cents
- Electric – 9 cents
If you’re using a percentage basis based off a logbook, it must be completed over a three-month period and renewed every three years (unless there has been a variance in use that would require you to re visit the percentage).
If you need help calculating your expenses and making sure everything is accurate, contact us! We take devil out of bookkeeping.