McGregor Bailey Blog

2016 Review of Commissioner's Mileage Rates

2016 review of Commissioner's mileage rates

On 4 May 2016, Inland Revenue stated that a recent review of the Commissioner's mileage rate has resulted in a reduction to the rate to 72 cents (from 74 cents for 2015) per kilometre for both petrol and diesel fuel vehicles for the 2016 income year. The reduction is largely due to lower average fuel costs during the 2016 income year compared to the 2015 income year and to some extent more efficient motor vehicles. The 2016 income year for business taxpayers with a standard 31 March balance date runs from 1 April 2015 to 31 March 2016.

Points to note are as follows:

• The Commissioner is required by statute to set a mileage rate for persons whose business travel is 5,000 or less in an income year.

• The mileage rate is set retrospectively for persons required to file a return for business income, so that the rate reflects the average motor vehicle operating costs for an income year.

• Persons who meet the criteria have a choice of using the Commissioner's mileage rate or using actual costs if they consider that the Commissioner's mileage rate does not reflect their true costs. Taxpayers that choose to use actual costs are required to keep records to support any expenditure claimed.

• The Commissioner does not propose to amend the returns for taxpayers who have already filed their 2016 returns using the 2015 mileage rate.

• The Commissioner accepts that employers may use the 2016 vehicle mileage rate as a reasonable estimate of costs when they reimburse employees for the use of their private vehicle for business related travel for a current income year (post-1 April 2016).

• Employers may use an alternative estimate other than the Commissioner's vehicle mileage rate when reimbursing employees for use of their private vehicle for employment related use.

• The mileage rate does not apply to motor cycles, hybrid and/or electric motor vehicles as these modes of transport are not commonly used for business purposes. Any self-employed persons who use these forms of transport for business purposes will need to calculate their actual expenditure or in the situation of an employer reimbursement, they may make a reasonable estimate of the employee's costs.

Getting Your PIE Tax Right

If you're investing in a PIE, be sure to get the right tax rate (Prescribed Investor Rate/PIR).  You should check with us when we do your tax return each year as it can change from year to year and there are no refunds of overpaid tax.

If your income is less than $48,000, use a rate of 17.5% unless you have so much PIE income that it exceeds $22,000. If husband and wife have PIE income in their joint names but their taxable incomes are taxed at different rates, it's better to split the PIE investment into two halves and invest separately, so one can be taxed at the lower rate. Otherwise, the whole of the investment has to be taxed at the rate applying to the higher taxpayer.

It is important to get your PIR correct on your PIE investments so contact us if you would like us to review your tax position and advise on the rate you should be using.

IRD Numbers for Property Sales

All vendors and purchasers of property other than their main home must now provide an IRD number as part of the land transfer process.


Offshore buyers must provide a New Zealand bank account number before they can obtain a New Zealand IRD number. And all non-resident buyers and sellers must provide their tax identification number from their home country, along with current identification requirements such as a passport.

Family trusts

Where a family's main home is owned by the family trust, the trust is not exempt from providing an IRD number.

It's quite common for a trust to own the family home, protecting the family from business or other relationship property risks. Up till now family trusts haven't needed IRD numbers unless they operated a business or owned rental properties. Now, when the family home is transferred into the trust or when the trust buys or sells property, the trust needs an IRD number. Trustees' own personal IRD numbers aren't acceptable.

The new requirements also affect changes of title. So, if a trustee dies or retires and the new trustee's name needs to be registered on the property title, the trust needs an IRD number to register the change.

If you are arranging for the family trust to buy, sell or transfer property, please contact us. If the trust does not already have an IRD number we can take care of this. Otherwise you could face costly and stressful delays while you sort out the paperwork.

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