Many New Zealand business owners assume their daily commute counts as a deductible business expense—but IRD rules say otherwise. Learn what you can and can’t claim, and how poor records can lead to costly mistakes.
If you’re a sole trader, contractor, or small business owner, you’ve likely wondered:
“Can I claim my vehicle travel from home to work as a business expense?”
It feels like a business trip. After all, you’re heading to the site, the warehouse, or your office to start the day. But according to Inland Revenue, that drive is considered private—and therefore non-deductible.
This is one of the most common areas where business owners get caught out. What feels like work and what’s claimable are not always the same thing.
Why IRD Treats Commutes as Private Travel
Inland Revenue’s stance is clear:
Travel between your home and your regular place of business is private, not business-related.
This applies even if:
- The vehicle is signwritten or owned by the business
- You’re mentally preparing for the day while you drive
- You make business-related calls or stop to grab supplies on the way
In other words, that first trip from your home to your base each day is usually not deductible—regardless of how essential it feels to your operations.
When Travel Can Be Claimed
There are legitimate business scenarios where travel costs are deductible, including:
- Travelling between job sites or customer locations during the day
- Visiting clients for quotes or meetings
- Picking up tools, supplies, or materials
- Working from home but travelling to a temporary job site
If your home is your main business base—such as a home office or workshop—you may be able to claim travel from home, depending on how your business is structured. However, the burden of proof lies with you, and IRD will expect solid documentation.
The key is being able to prove that the travel was directly connected to income-generating activity.
Where Business Owners Often Get It Wrong
This is where good intentions fall short.
You might genuinely believe all your vehicle use is business-related. But if IRD reviews your records—or you don’t have any at all—you could be forced to repay claimed deductions and potentially face penalties.
Common mistakes include:
- Assuming all travel is deductible without keeping a logbook
- Claiming 100% of vehicle expenses without showing a business/private split
- Recording only some trips or relying on memory
Intent is not enough. IRD requires proof, not assumptions.
How to Stay Compliant and Maximise What You Can Claim
Avoiding issues doesn’t require complex systems—just a few good habits:
- Keep a logbook – Track your travel for at least 90 consecutive days, noting business vs. private use
- Record each business trip – Include the date, distance, destination, and reason for travel
- Choose the right method – Use either the mileage rate or actual cost method, depending on your situation
- Seek advice – Don’t guess; if you’re unsure, ask your accountant or advisor before claiming
By putting systems in place now, you’ll not only reduce the risk of errors—you’ll also ensure you’re claiming everything you’re entitled to, without overstepping IRD’s guidelines.
For More Guidance on This Topic
Chartered Accountants Australia & New Zealand has provided a detailed breakdown of what constitutes private vs. business travel. This includes practical examples and IRD’s reasoning:
Read the full article here: Travel by Car Between Home and Work – Private or Not?
Ready to Take Control of Your Business Expenses?
Many business owners are surprised at how much money slips through the cracks from small assumptions like this. Misunderstanding vehicle claims is just one of several blind spots that can eat into your profits over time.
Our Financial Freedom Checklist is a great place to start. It helps you review your current setup, highlight missed opportunities, and ensure you’re building a business that works for you—not the other way around.
Download the checklist today and start the new financial year with more clarity, better records, and greater control.
