The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Greg Millar
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Kilometre rates for business use of vehicles

manners street signtraffic light-8722018/2019 income year

Vehicle Type

Tier One Rate

Tier Two rate

Petrol or Diesel

79 cents

30 cents

Petrol Hybrid

79 cents

19 cents


79 cents

9 cents

Using the Tier One and Tier Two rates

The Tier One rate is a combination of your vehicle's fixed and running costs. Use the Tier One rate for the business portion of the first 14,000 kilometres travelled by the vehicle in a year. This includes private use travel.

The Tier Two rate is for running costs only. Use the Tier Two rate for the business portion of any travel over 14,000kms in a year. 

Using Tier One and Two rates for employee reimbursement

If you're an employer, you can use Tier One and Tier Two kilometre rates to get a reasonable estimate of expenditure. This will help reimbursing an employee who has business-related use of the vehicle.

Your employee will need a record showing their business-related use of the vehicle over the income year, such as a logbook. You then use it to calculate the exempt portion of reimbursement using the kilometre rates we've set. For example, use the Tier One rate for the business portion of the first 14,000 kms (total) travelled by the vehicle in the income year, and then the Tier Two rates after that.


At Alliott NZ looking after your tax is not just about helping you to pay less tax – although we do make sure you’re not paying too much. We’re here to help you with any aspect of tax from compliance to complex structures. Call us in Auckland on 09 520 9200 today.

Alliott NZ are Xero Platinum Partners. Contact us for a free trial and to speak to one of our Xero certified advisors about how to get the most out of Xero for your business.

Topics: business-related use employees logbook travel vehicle