What is mileage?
You’ll find yourself doing many work trips as part of running a business. You can claim every business kilometre you travel as an expense provided you keep accurate records. Mileage is the cost of using your vehicle for business purposes.
You’ll find yourself doing many work trips as part of running a business. You can claim every business kilometre you travel as an expense provided you keep accurate records. Mileage is the cost of using your vehicle for business purposes.
Vehicle Log Book
You should start a vehicle log book as soon as possible to claim mileage. You can find them here and most stationery stores. There are also several apps available (Vehicle log Book GPS, Vehicle log book pro) that will do the trick.
Keeping a log book is straightforward. The tricky part is getting in the habit of doing it after every business trip. Below is an example of what is required for each.
You should start a vehicle log book as soon as possible to claim mileage. You can find them here and most stationery stores. There are also several apps available (Vehicle log Book GPS, Vehicle log book pro) that will do the trick.
Keeping a log book is straightforward. The tricky part is getting in the habit of doing it after every business trip. Below is an example of what is required for each.
Should you forget to log a trip, Google maps is a great way to work out the kilometres travelled. You can put your starting point and destination in here.
How to claim
Inland Revenue allows three ways to claim mileage:
Mileage Rate
Inland Revenue sets out a per kilometre rate that can be applied to the total business kilometres travelled annually. You can claim up to 5,000 kilometres per tax year under this rate.
Should you do the odd business trip, then this is good way to claim. If you travel more than the maximum 5,000 you cannot claim the extra kilometres, you’re probably better off using the Log Book method.
How to claim
Inland Revenue allows three ways to claim mileage:
- Mileage Rate
- Log Book
- Actual Costs
Mileage Rate
Inland Revenue sets out a per kilometre rate that can be applied to the total business kilometres travelled annually. You can claim up to 5,000 kilometres per tax year under this rate.
Should you do the odd business trip, then this is good way to claim. If you travel more than the maximum 5,000 you cannot claim the extra kilometres, you’re probably better off using the Log Book method.
Log Book
You need to keep a log book for 90 consecutive days under this method. After 90 days, you can claim a percent of your vehicle costs (fuel, repairs, registration etc.) based on the business kilometres you’ve done. This percent is applicable for up to three years.
We’ve found the advantages of this to be:
However you need to:
We’d recommend this method if you do a high amount of business kilometres.
Log Book
You need to keep a log book for 90 consecutive days under this method. After 90 days, you can claim a percent of your vehicle costs (fuel, repairs, registration etc.) based on the business kilometres you’ve done. This percent is applicable for up to three years.
We’ve found the advantages of this to be:
- The 5,000 KM maximum doesn’t apply
- Once the initial 90 day period is over, you don’t need to log your trips for three years.
However you need to:
- Keep receipts for all vehicle expenses
- Keep the 90 day log to a high standard as per IRD rules here
We’d recommend this method if you do a high amount of business kilometres.
Actual costs
You can claim actual costs if you believe your business costs are higher than the above two methods allow.
You need to keep accurate details of private and work-related travel to do this. In this you need reason and distance of journey for every business trip, and every vehicle expense.
We would only recommend this method if there was something unusually high about your vehicle costs for the year.
Summary
By now you should have a good idea of how is best to claim your mileage costs. As always, you can refer to IRD’s website for the latest updates on mileage.
Happy travels.
Actual costs
You can claim actual costs if you believe your business costs are higher than the above two methods allow.
You need to keep accurate details of private and work-related travel to do this. In this you need reason and distance of journey for every business trip, and every vehicle expense.
We would only recommend this method if there was something unusually high about your vehicle costs for the year.
Summary
By now you should have a good idea of how is best to claim your mileage costs. As always, you can refer to IRD’s website for the latest updates on mileage.
Happy travels.
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