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2005 media releases

Reimbursement for the use of a private motor vehicle
22 September 2005

Employers may use published mileage rates to reimburse employees who use their own vehicles for work purposes.

Under the Income Tax Act 2004, employers may determine the amount of employee reimbursement exempt for tax purposes when employees use their own vehicles for work purposes.

Employers can reimburse an employee based on actual expenditure incurred by the employee - or by making a reasonable estimate of the expenditure incurred. A 'reasonable estimate' recognises that employers have differing business needs and that a 'one size fits all' rate may not necessarily be accurate.

Employers may use rates published by a reputable independent New Zealand source, representing a reasonable estimate (e.g. New Zealand Automobile Association Inc mileage rates) to reimburse staff using their private motor vehicle for work purposes.

The mileage rate used must be a reasonable estimate. In establishing a reasonable estimate regard should be given to the nature of the business and the type of employee vehicles.

Employers may also continue to use the rates published by Inland Revenue in the February 1996 Tax Information Bulletin (Vol 7, No 8).

This gives employers four options when reimbursing staff for business use of a private vehicle:

  • actual expenditure incurred by the employee
  • an employer's own reasonable estimate of expenditure incurred by an employee
  •  published mileage rates, as long as they represent a reasonable estimate
  • the rates published by Inland Revenue in the February 1996 Tax Information Bulletin.

Employers may apply published mileage or other rates effective immediately. The other options have been available to employers for a number of years.

Mileage rates for vehicle expenditure incurred by self-employed are being reviewed by Inland Revenue.

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Communications and Inquiry
Inland Revenue

To make a media query:
Phone 04 890 1698 or email mediaqueries@ird.govt.nz
Please note, the email address is only for enquiries from the news media. It is monitored during normal business hours 8am - 5pm Monday to Friday.

P O Box 2198
Wellington 6140
New Zealand


Date published: 22 Sep 2005

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