Can I Claim Motor Vehicle Expenses (New Zealand) as a Business Expense in New Zealand?
Motor vehicle costs are deductible for the business-use portion only. Sole traders can use the IRD mileage rate (NZD 1.04/km for the first 14,000 km in 2025/26) or actual costs apportioned by a 3-month logbook. Company vehicles used privately trigger FBT.
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What Inland Revenue (IRD / Te Tari Taake) says
Sole traders: maintain a 3-month logbook every 3 years to establish business use percentage, then apply that percentage to actual costs. Alternatively, use the mileage rate: NZD 1.04/km for the first 14,000 business km, then NZD 0.35/km. Companies: deduct actual costs but apply FBT on private use by employees or shareholders at 20% of vehicle cost per quarter, taxed at the FBT rate.
When you can claim
- Sole trader: business kilometres at NZD 1.04/km (first 14,000 km) under the mileage rate method
- Sole trader: actual costs (fuel, insurance, registration, WOF, maintenance, depreciation) proportioned by logbook business use percentage
- Company: full actual vehicle costs deductible, with FBT charged on the private-use portion provided to employees or shareholder-employees
When you cannot claim
- Private travel, including ordinary commuting between home and a regular workplace
- Travel costs for a spouse or family member unless they are employed in the business and travelling for a genuine business purpose
- Additional depreciation or petrol claims when already using the mileage rate method — the rate covers all running costs
Good to know
Pro tip: Keep a 3-month logbook at least once every 3 years to validate your business-use percentage. Digital apps that use GPS to log journeys are accepted by IRD and make this effortless.
Important: Electric vehicles lost their FBT exemption from 1 April 2025 and are now subject to standard FBT rules. Company vehicles available to a director even just on weekends trigger FBT for the full period of availability.
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