NZ vehicle logbook: what IRD requires and how to claim correctly

Vehicle expenses are one of the most commonly claimed and most commonly botched deductions for NZ self-employed people. The rules are clear, but the record-keeping discipline trips people up.

Claim vehicle expenses without a logbook that meets IRD's requirements and those claims are at risk in an audit. The record-keeping isn't complicated, just consistent.

Why a logbook is required

IRD allows self-employed people to deduct the business-use portion of vehicle costs: fuel, registration, warrant of fitness, insurance, repairs, and depreciation. But you can only claim the business portion.

Without a logbook, you have no basis for calculating that proportion. IRD won't accept an estimate or a rough guess. They require documented evidence of actual use.

The logbook establishes your business use percentage, which is then applied to your total vehicle costs to determine the deductible amount.

What IRD requires in a vehicle logbook

Each logbook entry must record:

- Date of the trip - Starting odometer reading - Ending odometer reading - Distance travelled (km) - Business purpose: specific enough to be credible ("client visit" is marginal; "client meeting with Acme Ltd, Auckland CBD" is better) - Destination or general route

Personal trips don't need a purpose recorded, but you do need to know the total odometer for the period to calculate total distance.

The 90-day logbook rule

You don't need to keep a logbook forever. IRD's approach works as follows:

1. Keep a continuous logbook for 90 days covering a representative period of your typical use 2. Calculate your business use percentage from that 90-day record 3. Use that percentage for the rest of the year (and up to 3 subsequent years) without keeping further records, provided your use pattern doesn't change materially

If your work pattern changes significantly (you start visiting clients more, or your business type changes), you need a fresh 90-day logbook.

The 90 days must be continuous and cover a typical period. Don't cherry-pick the 90 days when you were travelling most for work.

How to calculate your business use percentage

Once you have your 90-day logbook:

1. Add up all business kilometres driven during the 90 days 2. Find total kilometres driven during the 90 days (ending odometer minus starting odometer) 3. Divide business km by total km and multiply by 100

Example: - Business km: 2,100 - Total km: 3,800 - Business use: 2,100 / 3,800 = 55.3%

Apply that 55.3% to your total annual vehicle costs to get the deductible amount.

What counts as a business trip

Not every drive in your vehicle is a business trip, even if you're self-employed:

Deductible: travel to client sites, supplier visits, business errands, trips to your business premises (if you have a separate office), attending professional development or conferences.

Not deductible: home to your regular place of work and back. If you work from home and have a home office, your home is your place of work and trips from there to clients generally are deductible. But if you have a separate office or workshop, the home-to-office commute isn't deductible even as a sole trader.

The same rules that apply to employees on travel allowances apply to the self-employed on vehicle deductions.

Free vehicle logbook template

PayWren's vehicle logbook template is a structured spreadsheet with four columns:

- Distance auto-calculated from odometer readings - Business and personal kilometres totalled separately - Business use percentage calculated at the end of the 90-day period - A summary sheet ready to hand to your accountant

Works in Google Sheets or Excel, no setup required.