Mileage rates for motor vehicles updated by IRD for the 2019/2020 year onwards

Inland Revenue has now finalised the kilometre rates to be used for the 2019/2020 income year for business motor vehicle expenditure claims. Previously interim rates remained in effect as  third-party information to set the kilometre rates used by IRD was not available due to COVID-19.

The rates issued by the Commissioner are

  • For the first 14,000 KM (tier     one) for the motor vehicle 82 cents per km
  • For subsequent (tier 2) KMs —     Petrol and diesel 28 cents per km — Hybrid 17 cents per km — Electric 9     cents per km

The tier one rate increased by three cents, while the tier 2 rates decreased by two cents (electric no change). The commissioner indicated the tier one increase is due to higher ownership costs of insurance and registration and the decrease to tier 2 is from lower fuel costs.

Taxpayers who have had filed their 2020 income tax returns using the interim rates are able to request their return to be reassessed to take into account these finalised kilometre rates.

These rates can be used, as before, to reimburse employees for their business use of their vehicles, as well as any other published mileage rate.

You can find the full details of the new rates here on the IRD website. If you have any questions regarding these new rates, please get in touch with us.

Contact us today for your no-obligation consultation.