The new IRD mileage rates
The IRD recently amended the mileage rates that can be claimed for business use of a motor vehicle expenditure. The new mileage rates apply for the 2009 income year, ended 31 March 2009.
Self employed business owners may use one of the following methods to calculate the proportion of business use of a motor vehicle:
* Actual records
* A logbook, or
* A mileage rate
The mileage rate applies in respect of:
* Self employed taxpayers
* Up to a maximum of 5,000 kilometres of work-related travel each year
* Motor vehicles irrespective of engine size whether they are powered by petrol or diesel. It does not apply to motor cycles
The rate set for motor vehicles has been increased from 62 to 70 cents per kilometre.
If business related travel of self employed persons is over 5,000 kilometres per annum then they should use one of these two methods:
* Actual Expenditure – you will need to keep accurate records to determine the proportion of business use.
* Log Book Method – You must keep a log book for a test period of at least 90 consecutive days, and then apply that proportion for the log book term (up to 3 years).
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