Inland Revenue’s mileage rate for motor vehicles has been increased to 73 cents per kilometre for the 2017 income year, up from 72 cents for the 2016 income year. This rate applies to both petrol and diesel fuel vehicles. The increase is due to a slight increase in fixed vehicle costs and higher average fuel costs during the 2017 income year. Inland Revenue is not proposing taxpayers make any adjustment if they applied the old mileage rate in the 2017 income year, but the 73 cent per kilometre reimbursement should be used going forward.
Inland Revenue have also been able to obtain reliable data in respect of the fixed and running costs in relation to hybrid and electric vehicles. For the 2017 income year, the mileage rate for hybrid vehicles is 73 cents per kilometre, and for electric vehicles is 81 cents per kilometre. Inland Revenue’s data shows that although these vehicles have lower running costs, these are offset by higher fixed costs.
The mileage rates can be used by self-employed people to determine the deductible costs of business use of a motor vehicle, and to reimburse employees for the business use of their private vehicles. Previously, there was a limit for self-employed people wanting to use this rate in that it could only be used for business travel up to 5,000km in an income year. This limit has now been removed, effective from 1 April 2017.
The mileage rates do not apply in respect of motorcycles. For self employed persons who use motorcycles, actual costs must be used or for employee reimbursement, a reasonable estimate of the employees costs may be used.