Employee reimbursement

To reimburse staff, including shareholder-employees using their own vehicle for work, you can use:

• IRD mileage rate, or
• rates published by a reputable independent New Zealand source representing a reasonable estimate (for example New Zealand Automobile Association mileage rates), or
• actual costs.

Our mileage rate

We accept the standard mileage rate as being a reasonable estimate of the costs likely to be incurred by an employee. An employer may choose to use the current rate of 77 cents per kilometre for reimbursing employees. 

The 5,000 km limit for self-employed people does not apply to employers using the mileage rate to reimburse employees. Although employers may use the mileage rate to reimburse employees that reimbursement must be a reasonable estimate of the costs likely to be incurred by the employee.

The reimbursement is exempt from income tax "to the extent to which it reimburses the employee for expenditure for which the employee would be allowed a deduction if the employment limitation did not exist". Employers who reimburse employees for business travel in excess of 5,000 km will need to consider whether the mileage rate is still a reasonable estimate of the employee's costs.

The rate applies irrespective of engine size or whether your vehicle is powered by a petrol or diesel engine. The mileage rate does not apply to motor cycles.

For information on previous mileage rates see our operational statements.

Actual costs

You can reimburse an employee's actual costs instead of using the mileage rates. For this method both the employer and employee must keep accurate records, including details of private and work-related costs, to justify the reimbursements.

Or, you can make a reasonable estimate of the costs likely to be incurred by your employee or group of employees.