This week IRD issued its first two Interpretation Statements for the year:
- IS 25/01 Income tax – deducting costs of travel by motor vehicle between home and work
- IS 25/02 FBT – travel by motor vehicle between home and work.
The updated guidance replaces previous statement IS3448.
IS 25/01 is relevant for self-employed taxpayers, partners in partnerships, and close companies that both qualify to and have elected to apply subpart DE to their motor vehicle expenditure and discusses:
- Business use
- Subpart DE rules
- Minor or insignificant private use; and
- Vehicles taken home for secure storage or for charging.
In relation to the last topic (noting the changes in technology since previous statement IS3448 was issued), the Commissioner was asked to consider whether taking an EV home to recharge the battery is sufficient to mean the travel is undertaken wholly for business purposes.
IRD’s view is that taking an EV home to charge is not of itself sufficient to make the relevant taxpayer’s journey between home and work a business journey or to make the relevant taxpayer’s use business use.
However, travel between home and work in a vehicle taken home for security reasons or for charging could constitute business use if other relevant factors mean that an exception applies, e.g.:
- A vehicle is necessary for the taxpayer to transport equipment / instruments (goods) that are essential to their work between home and their workplace for use at both their home and workplace; or
- The taxpayer’s home is a workplace / base of operations for the purposes of travel between home and work.