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GST (Goods and services tax) Te tāke hokohoko

Calculate a one-off adjustment of private assets used in business

When to use it

You can make a one-off adjustment when:

  • there is a change in the use of an asset costing less than $18,000 from private to business, or
  • a private asset costing less than $18,000 is acquired but is sometimes used for the business.
Note

The adjustment is based on the estimated taxable use over the life of the asset.

How to calculate it

The table below explains how to calculate the one-off adjustment for a private asset costing less than $18,000 used in business and provides an example.

Scenario: David, a farmer, buys a horse float for $15,000, intending to use it for 25% business and 75% private purposes. Its current market value is $12,000.

Step What to do Example
1

Work out the percentage of business (taxable) use. Call this T.

25%

2

Work out the lesser of the:

  • purchase price of the asset including GST, or
  • current market value of the asset.

Call this figure L.

$12,000

3

Multiply L by T.

$12,000 x 25% = $3,000.

4
  • Divide the amount from Step 3 by 9. This is your GST adjustment.
  • Show this GST adjustment on your GST adjustments calculation sheet (IR372) under "Private assets used for business costing less than $18,000 (a one-off adjustment)".
  • Transfer the totals to Box 13 on your GST return.

$3,000 divide by 9 = $333.33

Private assets used in business costing more than $18,000

You can apply in writing for a one-off input tax adjustment for assets costing over $18,000, where a 100% change of business use occurs, if:

  • you have previously made one-off input tax adjustments
  • you have elected to make one-off output tax adjustments for any previous changes from business to private use, or
  • you can prove that making period-by-period or annual adjustments is impractical.

We also take into account the nature of goods and services, for example an asset retained for a number of years, such as property.

Important

If we approve an application for a one-off input tax adjustment and if the business use changes to private use, you must make a one-off output tax adjustment to reflect the private use.

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