As an Uber driver in New Zealand, it's important to understand the different methods for claiming car expenses and choose the one that best suits your needs. The two methods available are the kilometre method and the actual cost method.
The kilometre method involves calculating your car expenses based on the number of kilometres you have driven for work purposes. The IRD sets a standard rate per kilometre each year, which is currently 82 cents per kilometre for the first 14,000 km and 28 cents per kilometre for any distance over 14,000 km. This method is simpler and easier to calculate, as it doesn't require you to keep detailed records of all your expenses. One of the main reasons to use the kilometre method is its simplicity. If you don't have a lot of car-related expenses or don't want to spend time keeping detailed records, the kilometre method is a good option. It's also a good option if you drive a lot for work, as the per-kilometre rate can add up quickly. This also a great option for those who use a private vehicle for business purposes.
The actual cost method involves calculating your car expenses based on the actual costs you've incurred during the year, such as fuel, repairs, insurance, and depreciation. This method requires you to keep detailed records of all your car expenses throughout the year. While it's more time-consuming, it can result in a higher deduction than the kilometre method if you have significant car-related expenses. The actual cost method is beneficial if you have significant car-related expenses or if you want to maximise your deductions. For example, if you have a high-end car with high depreciation, repairs, and insurance costs, the actual cost method may result in a higher deduction than the kilometre method. However, it's important to keep accurate records of all your expenses to ensure you're claiming the correct amount.
In New Zealand, you can claim car expenses if you use your car for work purposes, including as an Uber driver. However, you can only claim expenses that are directly related to your work, not personal use. You'll need to keep accurate records of your expenses and kilometres driven to support your claims. If you're using the actual cost method, you'll also need to keep all your receipts and invoices. The IRD may request to see these records, so it's important to keep them for at least seven years.
In conclusion, both the kilometre method and actual cost method have their benefits and drawbacks. It's important to choose the method that best suits your needs and to keep accurate records of your expenses and kilometres driven. As an Uber driver in New Zealand, you can claim car expenses if you use your car for work purposes, but you must ensure that your claims are supported by accurate records and comply with the relevant tax laws.