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Income Tax Act 2007

Deductions - Motor vehicle expenditure

DE 2B: Election to use kilometre rate method or costs method

You could also call this:

“Choosing how to calculate car expenses for business use”

You can choose how to calculate a deduction for using your car for business. You can pick between two methods: the kilometre rate method or the costs method. You make this choice when you file your tax return.

If you want to use the kilometre rate method, you need to say so in your tax return. You can start using this method from the latest of these dates: 1 April 2017 (unless you sold the car that year), the day you bought the car, or the day you first used the car for business.

If you don’t choose the kilometre rate method, you’ll automatically use the costs method for that tax year.

Once you’ve made your choice for a specific car, you can’t change your mind. Your choice applies to all future tax years until you sell the car.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7271117.

Topics:
Money and consumer rights > Taxes
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“How to work out the business portion of your car use”

Part D Deductions
Motor vehicle expenditure

DE 2BElection to use kilometre rate method or costs method

  1. A person may, in their return of income for an income year, choose to apply the kilometre rate method described in section DE 12 to calculate a deduction for the business use of a motor vehicle and for the income year that includes the latest of—

  2. 1 April 2017, unless the person disposes of the motor vehicle in that income year:
    1. the day on which they acquire the motor vehicle:
      1. the day on which they first start using the motor vehicle for business purposes.

        1. If a person does not make an election under subsection (1), they are treated as making an election in the return of income to use the costs method for the corresponding income year.

        2. An election made under subsection (1) or (2) in relation to a particular motor vehicle cannot be revoked, and applies for all subsequent income years until the end of the income year that includes the day on which the person disposes of the motor vehicle.

        Notes
        • Section DE 2B: inserted, on (applying for the 2017–18 and later income years), by section 74 of the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 (2017 No 3).