IRD has released an Operational Statement that replaces Operation Statement OS 09/01 Commissioner’s statement on use of a kilometre rate for expenditure incurred for business use of a motor vehicle, issued in May 2009. This Statement explains how the kilometre rates are to be applied and also sets the rates for the current year.

This Statement is made up of two parts. Part One deals with deductions for the business use of a motor vehicle. Part Two deals with the tax treatment of reimbursement payments made by an employer to an employee where the employee uses their private motor vehicle for employment purposes. Both Parts are followed by examples and a flowchart that sets out the process that applies to each.

2018/2019 rates:

Tier 1

• Petrol or Diesel, Petrol Hybrid, Electric – 76 cents

Tier 2

• Petrol or Diesel – 26 cents
• Petrol Hybrid – 18 cents
• Electric – 9 cents

Use this link to download the reference and to understand the 2 tier rates stated above.

Updated information: NZPPA contacted IRD to clarify above (thank you IRD): There has been a delay in updating the IRD website with this information. From IRD: Note that there are two parts to the statement. The first deals with deductions under subpart DE of the Income Tax Act 2007. The rate for this part applies from the 2017/2018 year. That date is built into the law. Part Two of the statement that deals with employers making employee reimbursements using the Commissioner’s kilometre rates. Where reimbursement has already been paid (based on the 2016/2017 rate), this will remain unchanged. The new Tier One rate (76 cents per km) set in the Statement may be used on an unlimited basis from the date of the statement for the remainder of the 2018/2019 year. From1/4/19, the new two tier rates must be used.