Following on from the released of Home-to-Work Travel Statement, an Operational Statement was recently released last week in two parts concerning the use of kilometre rate for expenses incurred in relation to business use of a motor vehicle - business deductions (OS 19/04a) and for employee reimbursement of a motor vehicle (OS 19/04b). The new statement updates and replaces the old operational statement (OS 18/01).

OS 19/04a outlines the application of the kilometre rate method and provides the 2018/19 kilometre rates for each vehicle type. The rates for selected vehicle types are made up of two tiers, tier one rate applies for the business portion of the first 14,000 kilometres travelled in an income year and tier two applies the business portion when the vehicle exceeds the 14,000 yearly kilometres.

The rates are as follow:

  • Tier One: 79 cents for all vehicle types.
  • Tier Two: 30 cents, 19 cents and 9 cents, for Petrol/Diesel, Petrol Hybrid and electric respectively.

OS 19/04b explains the acceptable method to establish the tax-exempt portion of any payment made to an employee as reimbursement of expenditure incurred by that employee where the employee uses their private motor vehicle in the employer’s business. The statement applies to employee reimbursements made from 16 August 2019 where the payment is made on behalf of an employee. Employees must keep a logbook or be able to provide other evidence that states the annual employment use of the vehicle. If the employees failed to do so, the tier one rate will be limited to the first 3,500 business kilometres. The Tier Two rates may be used for kilometres travelled for employment purposes above the 3,500 kilometre threshold.