Income Tax Act 2007

Deductions - Motor vehicle expenditure

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

You could also call this:

"Choose how to claim vehicle expenses: by kilometres or costs"

You can choose to use the kilometre rate method or costs method to calculate a deduction for the business use of a motor vehicle. You make this choice in your return of income for an income year. This choice applies from the latest of 1 April 2017, the day you acquire the motor vehicle, or the day you first start using it for business purposes. If you do not make a choice, you are treated as choosing the costs method. You can find the kilometre rate method in section DE 12. This choice cannot be changed and applies for all subsequent income years until you dispose of the motor vehicle. You keep using the chosen method until you dispose of the motor vehicle. This is the case even if you want to switch to the other method. Your choice is made for all income years after you acquire the motor vehicle or start using it for business purposes.

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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.

This page was last updated on 29 January 2026 — View changes

Topics:

Money and consumer rights > TaxesBusiness > Industry rules

DE 2: Deductions for business use, or

"How to claim deductions for business use of your car"

DE 3: Methods for calculating proportion of business use, or

"How to work out the business portion of your car use"

Part DDeductions
Motor vehicle expenditure

DE 2BElection to use kilometre rate method or costs method

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

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.
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 1 April 2017 (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).