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MHK Chartered Accountants Update on IRD Rate Changes

Wednesday 31 May 2017, 11:17AM

By Beckie Wright

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For the 2017 tax year (1 April 2016 to 31 March 2017), the mileage rate for both petrol and diesel fuel vehicles has increased to 73 cents per km.  Previously these were at 72 cents per km.

For the first time, IRD have also set mileage rates for hybrid and electric cars.  The mileage rates for these vehicles are:

                        Hybrid - 73 cents per km

                        Electric - 81 cents per km.

 

These rates are surprisingly high.  However IRD state:  “For both Hybrid and Electric vehicles, our data shows that although these types of vehicle have lower running costs, these are offset by higher fixed costs”.

Ian Malcolm, Managing Director of MHK Chartered Accountants Auckland, comments, “If you're an employer you can use the above rates when reimbursing employees for the use of their private vehicle for work-travel for the current tax year (1 April 2017 to 31 March 2018).  However if the mileage rate doesn't reflect your actual costs, other methods are available, also if your work-travel is more than 5,000km per year, you must keep a record of your actual vehicle expenses.”

For more information about mileage rates go to www.ird.govt.nz and search keywords: mileage rates.

On 1 April 2017, the threshold for correcting a minor error in your next tax return increased to $1,000. This applies to tax returns for Income tax, GST, FBT, RWT and NRWT.   

 

Ian Malcolm of MHK Chartered Accountants comments favourably on this change. “It is pleasing to see this pragmatic approach being taken by the IRD when minor errors occur.  This not only reduces compliance and disclosure costs, it also removes manual intervention at the IRD’s end, with less likelihood of unnecessary communications eventuating between the taxpayer and the IRD.”

 

Ian Malcolm clarified, “This can be utilised when the total discrepancy in the assessment that is caused by the error is $1,000 or less, that’s the amount of tax not the amount of say the tax invoice in the case of a GST error, also the error has to have been caused by a clear mistake, simple oversight, or mistaken understanding on your part”.

Use-of-money interest (UOMI) rate change

On 8 May 2017 the UOMI rates on underpayments and overpayments of tax changed.

The new rates are:

                        underpayments - 8.22% (down from 8.27%).

                        overpayments - 1.02% (down from 1.62%).

 

IRD state that rates are reviewed regularly to ensure they are aligned with market interest rates.

MHK Chartered Accountants Auckland are pleased to see this minor improvement in the interest rate charged, however are disappointed that the IRD dropped the interest rate they pay by 0.6%

 

Contact MHK Chartered Accountants for clarifications on any particular circumstance or concerns you may have.

 

MHK Chartered Accountants are Auckland Chartered Accountants who specialise in business structuring and legally minimising all types of taxation obligations, and welcome a no-obligation discussion free of charge;  for more information please contact Ian Malcolm 09 917 2893 or Aaron Neels 09 917 2897.

http://aucklandaccountant.net.nz.