FAST FACTS

If you have a vehicle that’s used only for business, you can claim all running costs as a business expense. Check with the IRD as there are a series of factors which determine whether your vehicle is 100% for business use. If you use your vehicle for business and personal trips you will need to work out the business proportion so you can calculate your deductible business expense.There are two ways to do this — keeping a logbook or adding up the actual costs. If your vehicle is petrol, diesel, hybrid or electric, you can use either method. You need to continue to use one method for as long as you own the vehicle. If your vehicle isn’t petrol, diesel, hybrid or electric then you must use the actual costs method.

Signwriting for a business vehicle is a workrelated cost, so if you are GST registered you can claim that back.

When making a decision to lease or buy a business vehicle, consider your business’ financial situation, including your cashflow budget, and review your priorities with an accountant before making a decision. Some questions to ask yourself are:

Is having a new vehicle about every three years important?

Do you have a high mileage due to travelling a considerable distance in your vehicle each year?

Is ownership of the vehicle more important than low upfront costs and no deposit?

What will be the financial position of your business at the end of the finance period?

What are the projected cashflows for your business?

Is the vehicle intended purely for business use or will it also be used personally?