New Mileage rates announced for 2017

The Commissioner of Inland Revenue has announced that the mileage rate for reimbursement of business miles increased by one cent to 73 cents per kilometre. This rate applies for the year ended 31 March 2017, though use of the previous year’s rate of 72 cent will not require amendment. This rate can be used for the current year until the Commissioner amends it.

The Commissioner commented that the increase is primarily due to a slight increase in fixed vehicle costs and higher average fuel costs during the 2017 income year. Rates per kilometre are now also available for hybrid and electric cars.

These mileage rates are:

  • Hybrid - 73 cents per km
  • Electric - 81 cents per km

These rates are available to be used for up to 5000 kms of travel:

  • To reimburse employees for business use of their vehicles
  • For self employed or other business use of vehicles instead of actual costs

Actual costs can be used though these require documentation of business usage and supporting records. Also, employers may use an alternative estimate other than the Commissioner’s vehicle mileage rate when reimbursing employees for use of their private vehicle for employment related use, such as running cost data published by other reputable sources, for example the New Zealand Automobile Association Incorporated.

The Commissioner is required to set a mileage rate for persons whose business travel is 5,000 km or less in an income year. The mileage rate is set retrospectively for persons required to file a return for business income though it is also used for reimbursement. Full details of this announcement are contained in the Operational Statement.