Many business owners use their own vehicle for work. The tax rules allow claims for business related travel, but the method chosen affects how the claim is calculated.
Good records help support the deduction, so it pays to understand the options.
What You Can Claim
Vehicle expenses can be claimed when the travel is for business activity. These costs may include fuel, repairs, maintenance, insurance, registration, warrant of fitness fees, and depreciation.
When a vehicle is used for both business and private purposes the business portion only can be claimed.
The Main Claim Methods
Logbook method
A logbook is kept for 3 months every 3 years. During this time every trip is recorded with distance and purpose. We apply the business percentage identified during those three months to all running costs and the result becomes your deductible amount.
Kilometre rate method
Under this method you record only the distance travelled for business. We then apply the IRD kilometre rates for the year using the two tiers IRD offers. This method suits people who do not want to keep a full logbook nor put costs through the business and fuss with providing invoices and proof of expenditure.
If you use kilometre rates you still need records of distances and the nature of the work undertaken as well as the odometer reading at the beginning and end of the financial year (1st April & 31st March the following year). Once this information is with us we store your information for the required period so it remains available if you ever need to show how the claim was calculated
Records That Support Claims
Accurate records help protect your position during an IRD audit. If you choose the Logbook method receipts need to be kept for all running costs – we help you with this by encouraging you to put all expenditure through your business account and sending all receipts through to Hubdoc to support the claim.
If you choose the Kilometre rate method then maintain your logbook with dates, readings, and reasons for travel and send to us when requested.
Why It Matters
Choosing the right method can change the amount you claim. Consistent records give you certainty, support compliance, and help you avoid errors. A clear approach also saves time when we ask for this information to enable the completion of your return.
