Use our kilometre rates to calculate the cost of using your motor vehicle for business purposes and your private vehicle for work purposes.
There are no GST implications for kilometre rates for self-employed people and employee reimbursement.
There are two ways you can calculate the proportion of your motor vehicle business use. You can either use actual costs, or a logbook.
Once you have calculated the business proportion for the 2017-18 and later income years, you can choose to use kilometre rates to calculate the amount of allowable expense for the cost of using your motor vehicle for business purposes. You can do this by using the following calculation:
kilometre rate x kilometres travelled x business proportion
|Vehicle type||First 14,000 kms||After 14,000 kms|
|Petrol or diesel||76 cents||26 cents|
|Petrol hybrid||76 cents||18 cents|
|Electric||76 cents||9 cents|
Toby is a property manager and uses his petrol hybrid vehicle for personal and work purposes.
In the 2017-18 income year Toby kept full records and travelled 20,000 km for work and 5,000 km private travel (80% or 0.8 work travel). Toby’s deduction would be calculated as follows:
|First 14,000km: $0.76 x 14,000km x 0.80 =||$8,512|
|After 14,000km: $0.18 x (25,000km - 14,000km) x 0.80 =||$1,584|
Toby can claim expenses of $10,096 for the use of his vehicle for business purposes.
If Toby hadn't kept full records or maintained a logbook, his deduction would be calculated as follows:
|First 14,000km: $0.76 x 14,000km x 0.25 =||$2,660|
|After 14,000km: $0.18 x (25,000km - 14,000km) x 0.25 =||$495|
Note: If there are not full records or a logbook maintained the proportion will be limited to the lesser of:
The kilometre rate applies irrespective of engine size and does not apply to motorcycles.
Once you have elected to use the kilometre rates method you must continue to use it for this motor vehicle.
Earlier income years
For the 2016-2017 and earlier income years, you can only use our kilometre rate for business travel up to 5,000km per year.
You can use the actual costs option if your vehicle costs are higher than the rates given.
You can claim deductions on your actual costs including depreciation loss for the business use of your motor vehicle. If you use this method you must keep accurate records including details of private and work-related expenses. Your records will need to show the reasons for and the distances of journeys for business travel.
You can also work out the business use of your vehicle by keeping a logbook for at least 90 consecutive days. After 90 days you can work out the average proportion of business to private use of your vehicle. The logbook term is up to three years, provided variance of business use is less than 20% of the logbook representation.
The logbook must record the:
You can use your logbook to calculate the deduction for the costs you incur and the amount of depreciation loss for the business use of your motor vehicle.
From the 2017-18 income year the kilometre rate is available to close companies where the only fringe benefit provided is the provision of one or two motor vehicles to shareholder-employees for their private use.
Close companies can elect to use the motor vehicle expenditure rules instead of paying FBT on the value of the benefit when the close company makes a motor vehicle available to a shareholder-employee for their private use and elects to apply the kilometre rate method.
The election will apply only to new arrangements between a company and shareholder-employees and once a company has chosen to use the kilometre rates method it will need to continue to use it until the vehicle is disposed of or the company stops using the vehicle for business use.
In some circumstances a GST adjustment may be required to reflect any difference between the actual proportions of business and private use of the motor vehicle and the intended proportions of business and private use of the motor vehicle.
When reimbursing staff, including shareholder-employees using their own vehicle for work, to calculate the tax-free amount you can use:
We accept the standard kilometre rate as being a reasonable estimate of the costs likely to be incurred by an employee. An employer may choose to use the applicable vehicle type rate per kilometre shown above for calculating the tax-free amount of an employee's reimbursement.
Where an employee has kept a logbook or other evidence that confirms their employment use, the 76 cents/km rate can be applied to the business portion of the first 14,000km. If evidence has not been kept the rate of 76 cents/km will be limited to the first 3,500km (25% of 14,000). The subsequent rates, depending on vehicle type, may be used for business travel beyond these limits.
Employers can use the 76 cent rate to calculate the tax-free reimbursement amount for emloyees work-related motor vehicle usage.
The rate applies irrespective of engine size or whether your vehicle is powered by a petrol, diesel or hybrid engine. It does not apply to motorcycles.
You can reimburse an employee's actual costs instead of using the kilometre rates. For this method both the employer and employee must keep accurate records, including details of private and work-related costs.
Or, you can make a reasonable estimate of the costs likely to be incurred by your employee or group of employees.