Claiming for Vehicle Expenses

If you use a vehicle for your business or rental property, then there are 3 options for claiming vehicle expenses:

Mileage Claim
Maintain a logbook recording each time you use the vehicle for business or rental property management and claim 77c per km travelled (click here for latest mileage rates).  This is the easist and most common method for property investors.  For example, if your rental property related travel was 200kms in the 2013 tax year, then you'll be able to claim $154.

Maintain a logbook for a 3 month period to determine the average business use of the vehicle over that period.  You then keep all invoices & receipts for your actual vehicle expenses and claim the portion of those expenses that relates to the business use.  For example, if your actual vehicle expenses are $10,000 and your business use is 70%, then you'll be able to claim $7,000 (the private portion of 30% is not claimed).

Maintaining a logbook can be an onerous process so you could try a GPS Logbook such as if you think an automatic trip recorder might make it easier for you.

Company Ownership
Sell your vehicle to your company and keep all actual invoices & receipts for your actual vehicle expenses.  If is generally acceped that the company can then claim 100% of all vehicle expenses.  The private portion of the vehicle expenses is calculated using 20% of the cost of the vehicle.  For example, if the company purchased the vehicle for $20,000 and the actual vehicle expenses are $14,000, then you'll be able to claim $10,000 (the private portion is $4,000 which is 20% x $20,000). 

It should be noted that expenses are only claimable to the extent to which they relate to earning income.  I imagine the IRD could challenge a rental property company owing a vehicle on the basis that there is not sufficient connection between the vehicle expenses and the income earning process.

For property investors, I think the best method is claiming mileage under option 1.

For businesses, the best method is either option 2 or 3.

Disclaimer: The above article is general in nature and we recommend you seek professional advice tailored to your specific personal situation.