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Income Tax Act 2007

Deductions - Specific rules for expenditure types

DB 56: Expenditure incurred in operating motor vehicle under agreement or arrangement affected by section CX 7

You could also call this:

“Claiming expenses for a vehicle someone else has the right to use”

If you are part of an agreement where someone else is treated as having the right to use a vehicle, you can claim a deduction for the costs of running that vehicle. This includes money you spend on operating the vehicle and any loss in value (depreciation) during the time the other person is considered to have the right to use it.

You can claim this deduction even if the vehicle is used for private purposes or generates income that is not taxed. However, you still need to meet the general requirements for claiming deductions, and other limits on deductions still apply.

This rule is linked to section CX 7, which talks about when an employer or someone connected to them is treated as having the right to use a vehicle under an arrangement.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513747.

Topics:
Money and consumer rights > Taxes
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Part D Deductions
Specific rules for expenditure types

DB 56Expenditure incurred in operating motor vehicle under agreement or arrangement affected by section CX 7

  1. A party to an agreement or arrangement referred to in section CX 7 (Employer or associated person treated as having right to use vehicle under arrangement) is allowed a deduction for expenditure or an amount of depreciation loss incurred in operating a motor vehicle during a period for which an employer or associated person is treated under that section as having a right to use the vehicle.

  2. This section overrides the private limitation and exempt income limitation. The general permission must still be satisfied and the other general limitations still apply.

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