Your ute or van is one of your biggest business expenses — and one of your biggest potential tax deductions. But IRD has specific rules, and getting them wrong can mean missing out on thousands of dollars in deductions, or worse, an audit.
Two Methods to Claim Vehicle Expenses
Method 1: IRD Kilometre Rates (Simpler)
You claim a set rate per kilometre driven for business. No need to track actual expenses — just your business kilometres.
2024–25 rates: - Petrol/diesel: $0.95/km (first 14,000 km), $0.35/km (over 14,000 km) - Electric: $0.09/km
Use the Vehicle Mileage Calculator to calculate your claim.
Best for: Tradies who use their vehicle mostly for private use and want simple records.
Method 2: Actual Costs
You track every vehicle expense and claim the business-use proportion.
Claimable actual costs: - Fuel - Insurance - Registration (WOF included) - Servicing and repairs - Tyres - Interest on a vehicle loan - Depreciation (20% DV for most utes/vans)
Best for: High-mileage tradies where actual costs exceed what the mileage rate would give.
To switch from kilometre rates to actual costs, you need a logbook.
The Logbook Requirement
IRD requires a logbook to establish your business-use percentage if you're claiming actual costs. You must:
- Keep the logbook for at least 90 consecutive days within the tax year
- Record every trip: date, start/end odometer reading, purpose, client/job
- Calculate business-use % from that 90-day sample
- Apply that % to full-year actual costs
The 90-day sample is used for the next 3 years unless your usage pattern changes significantly (e.g. you start using a company vehicle or change jobs).
What Counts as Business Travel?
Claimable: - Site to site travel - Your office or home base to client sites (if your base of operations is your home) - Trips to suppliers, merchants, trade stores - Client meetings - Training in your trade
NOT claimable: - Home to fixed workplace (commuting) - Personal trips on work days
Grey area: If you work from home and your home is your principal place of business, travel from home is generally deductible. Get advice from your accountant.
GST on Vehicle Expenses
If you're GST registered, you can claim GST back on vehicle expenses proportional to business use.
Example: - Annual fuel cost: $5,000 (inc GST) - Business use: 70% - Business fuel: $3,500 - GST claimable: $3,500 × 3/23 = $456.52
For vehicle purchases: - If 100% business use: claim full GST - If mixed use: claim only the business-use proportion
Purchasing a Vehicle — FBT Considerations
If your business is a company (not a sole trader) and you use the company vehicle privately, Fringe Benefit Tax (FBT) may apply. FBT is complex — speak to your accountant before putting a vehicle through a company.
For sole traders, there's no FBT — just the business-use percentage claim.
Keeping Records IRD Expects
- Logbook (physical or digital, e.g. Tradify mileage tracking)
- All receipts for fuel, servicing, etc.
- Insurance documents
- Loan statements (if claiming interest)
Digital records are fine. IRD accepts photos of receipts, digital logbooks, and exported records from apps.
Common Mistakes to Avoid
- Claiming 100% when there's private use — IRD will question this
- Not keeping a logbook — difficult to substantiate your claim
- Forgetting depreciation — one of the biggest deductions, often missed
- Claiming the GST-inclusive amount on the income tax return — always use the ex-GST cost
Use our Vehicle Mileage Calculator to estimate your deduction.
About NZ Tradie Tools: Practical resources for New Zealand self-employed tradies.