Claiming Vehicle Expenses: A Guide for Small Businesses in New Zealand

If you use your personal vehicle for business, you might be able to claim some of the running costs in your tax return. But here’s the catch: unless your car is used 100% for business (and let’s be honest, that’s rare), you’ll need to figure out what portion of your vehicle use is actually business-related. Let’s explore how to get it right for business vehicle use versus personal vehicle use.

That’s where the logbook method comes in — and it’s simpler than it sounds.

What Is the Logbook Method?

The logbook method is IRD’s preferred way to determine how much of your vehicle use is for business. You keep a logbook for 90 consecutive days, recording:

• The date and reason for each business trip

• The distance travelled

• Your vehicle’s odometer readings at the start and end of the period

  
  

Once the 90 days are up, you calculate the percentage of business use. For example, if 3,000 km out of 10,000 km were for business, your business use is 30%. You can then claim 30% of your vehicle costs — like fuel, maintenance, insurance, and even depreciation — as business expenses.

Important Details to Log

You must log:

• Start/end dates & odometer readings

• Date, distance, and reason for each business journey

  
  

If your business use doesn’t vary much, this percentage can be used for up to three years before you need to do another logbook.

Alternative Methods for Claiming Vehicle Expenses

There are several methods to claim vehicle expenses. Each has its own advantages and considerations.

1. Kilometre Rate Method

Instead of tracking actual costs, you can use IRD’s published kilometre rates to calculate your claim. You’ll still need to know your business kilometres, but this method is less admin-heavy than tracking every receipt.

2. Actual Cost Method

If your vehicle costs are high and you want to claim every cent, you can use the actual cost method. This requires detailed records of all expenses and a way to prove your business use — usually via a logbook.

3. Default 25% Claim

If you do not keep records, your business claim is reduced to a maximum of 25% of your vehicle running costs. This is not recommended, as it may not accurately reflect your actual business use.

Need Help Figuring It Out?

At Count Me In Limited, we help small business owners and self-employed clients make sense of these options — and choose the one that works best for them. If you’ve already collected your logbook data (or are thinking about it), we can:

• Calculate your business use percentage

• Help you decide which method suits your situation

• Make sure your claim is accurate

  
  

We’re here to make tax less stressful and more straightforward — so you can focus on running your business, not crunching numbers.

Why Accurate Claims Matter

Accurate claims can significantly impact your bottom line. By ensuring you claim the correct amount, you can free up funds for other business needs. This means more money for growth, marketing, or even just a little extra cash flow to ease your financial worries.

The Importance of Record Keeping

Good record keeping is essential. It not only helps you during tax season but also provides clarity on your business finances throughout the year. Keeping track of your vehicle expenses can give you insights into your overall business operations, allowing you to make informed decisions.

Conclusion

Navigating vehicle expense claims can be tricky, but it doesn’t have to be. By understanding the logbook method and alternative claiming options, you can ensure that you’re maximizing your deductions while staying compliant with IRD regulations.

If you’re feeling overwhelmed, remember that help is just a call away. At Count Me In Limited, we’re dedicated to simplifying your financial tasks, so you can focus on what you do best. Get in touch today and let’s make tax time a breeze!