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New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Motor vehicle expenditure

DE 1: What this subpart does

You could also call this:

“This subpart explains how to calculate business use of a personal vehicle”

This part of the law explains how to figure out how much of your car use is for business when you use your car for both business and personal reasons.

These rules don’t apply to you if:

  • You’re a company, unless you’re a special type of company called a close company
  • You only earn money from a job
  • You only use your car for making money or as a work benefit

If you’re a close company, and you’re both an employee and an owner, when you use the company car for business, it counts as the company using it for business.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513841.

Topics:
Money and consumer rights > Taxes
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DD 11: Some definitions, or

“Definitions of key terms related to deductions in the Income Tax Act”

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DE 2: Deductions for business use, or

“How to claim deductions for business use of your car”

Part D Deductions
Motor vehicle expenditure

DE 1What this subpart does

  1. This subpart sets out the rules for determining the proportion of business use of a motor vehicle to its total use when a person uses a motor vehicle partly for business purposes and partly for other purposes.

  2. This subpart does not apply—

  3. to a company, unless the company is a close company to which section CX 17(4B)(b) and (c) (Benefits provided to employees who are shareholders or investors) applies:
    1. to a person whose only income is income from employment:
      1. to a motor vehicle that is used only—
        1. for the purpose of deriving income; or
          1. for a purpose that constitutes a fringe benefit.

          2. When this subpart applies to a close company to which section CX 17(4B)(b) and (c) (Benefits provided to employees who are shareholders or investors) applies, business use of a motor vehicle by a shareholder-employee of the close company is treated as being business use by the close company.

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          Notes
          • Section DE 1(2)(a): replaced, on (applying for the 2017–18 and later income years), by section 72(1) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
          • Section DE 1(3) heading: inserted, on (applying for the 2017–18 and later income years), by section 72(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
          • Section DE 1(3): inserted, on (applying for the 2017–18 and later income years), by section 72(2) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).
          • Section DE 1 list of defined terms close company: inserted, on (applying for the 2017–18 and later income years), by section 72(3) of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).