If your vehicle is used for both business and private purposes, you can only claim the portion related to your business use.

Motor Vehicle Expenses can include:

• Petrol
• Repairs & maintenance
• Insurance
• Warrant of Fitness fees
• Registration fees
• Road user charges
• Hybrid/electrical charging costs

If you have a vehicle that's used only for business, you can claim 100% of the running costs — no logbook needed. This includes fuel, maintenance, insurance, registration, and even depreciation. If you use your personal vehicle for business, you can claim a portion of the running costs. A logbook must be kept for at least three months to calculate the business use percentage. You must complete a new logbook at least every three years, or sooner if your business use changes significantly. If business use drops by more than 20%, you are required to do another logbook.

We recommend paying all vehicle-related costs (insurance, registration, repairs) from your business account.

Claiming Methods

You can choose between two methods:

1. Actual Costs Method

Under this method, claim motor vehicle expenses by multiplying actual costs by the percentage of business use. You’ll need to keep records of all expenses — and be prepared to justify your business use percentage. If you don’t keep a logbook, IRD may only allow up to 25% of expenses as deductible.

2. Kilometre Rate Method

This is the simplest way to claim vehicle use for your business. Instead of tracking fuel or car-related expenses, we apply IRD’s kilometre rate to the distance you’ve driven for work.

What we need from you:

A 90-day logbook to show how much of your driving is for business (only needed once every three years — or sooner if things change).

Your odometer reading on 1 April and 31 March each year (start and end of the financial year).

No receipts, no fuel entries, no hassle You don’t need to enter petrol, servicing, or other car costs into Xero. As long as we have your logbook and odometer readings, we’ll take care of the rest — accurately and in line with IRD rules.

Still unsure? Let us help you pick the best method and stay compliant — we’re just a phone call (or Zoom) away.