Company Vehicle - what can I claim?

If you run a small or medium business in New Zealand and use a vehicle, it's really important to know what vehicle expenses you can claim on your taxes. This will help you save money and manage your business finances better. This guide is a simple walk-through of everything you need to know about claiming expenses for your company vehicles.

Understanding What Expenses You Can Claim

For your company vehicles, there are several expenses you can claim. These include:

1. Fuel Costs: Money spent on petrol or diesel for business trips can be claimed.
2. Maintenance and Repairs: If your vehicle needs a service or repair, these costs are claimable as long as they're for business use.
3. Insurance and Registration Fees: The costs for insuring and registering your company vehicle can be claimed.
4. Lease Payments: If you lease your vehicle, the lease payments are claimable.
5. Depreciation: As your vehicle gets older, it loses value. This decrease in value, known as depreciation, can also be claimed.

It's important to remember you can only claim these expenses when the vehicle is used for business purposes.

Distinguishing Between Business and Personal Use

Many business owners use their vehicles for both personal and business purposes. It's crucial to separate these uses for tax purposes. The best way to do this is by keeping a logbook. This logbook should include:

• Date of each trip
• Distance traveled
• Reason for the trip (how it's related to your business)

This logbook should be kept for at least three months every three years. It helps you calculate the percentage of vehicle use that is for business, and therefore, the percentage of costs you can claim.

Claiming Depreciation

Depreciation is the loss in value of your vehicle over time. To claim this, you need to use the depreciation rates set by the government. These rates vary depending on the type of vehicle and its initial value. Calculating depreciation can be a bit complex, so you might want to get help from an accountant to make sure you're doing it right.

GST Claims on Vehicle Expenses

If your business is registered for GST, you can claim the GST part of your vehicle expenses. This includes GST on buying the vehicle and ongoing costs like fuel and maintenance. But remember, just like other expenses, you can only claim the GST for the business use part of these costs.

Financing: Buying vs Leasing Vehicles

How you finance your vehicle also affects what you can claim. If you buy a vehicle, you can claim depreciation along with other costs. If you lease, you can claim the lease payments. But, if you also use the vehicle for personal reasons, you can only claim the part of the payments that are for business use.

Keeping Good Records

Keeping all your receipts and records for vehicle costs is super important. Make sure your logbook is up to date with your business trips. This helps you claim the right amount and also show proof to the tax department if they ask.

Understanding and correctly claiming expenses for your company vehicles can really help your small business save money. Keep detailed records, know how to separate business and personal trips, and stay updated on tax rules. If things seem confusing, it's always a good idea to talk to an accountant for advice. They can help make sure you're claiming everything correctly and getting the most benefit for your business. Remember, every dollar you save on taxes can be reinvested into growing your business, so it's worth taking the time to get your vehicle expense claims right.

Contact us at Accounting R Us.