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GST (Goods and services tax) Te tāke hokohoko

Calculate period-by-period adjustments of private assets used in business

When to use it

If you make period-by-period adjustments you make the private use adjustment in the return that covers the time that the goods and services were used privately.

There are two types of adjustments to make:

  • adjustments for revenue or expense items, and
  • adjustments for capital or asset items.

Revenue or expense items

Revenue or expense items are items used up or sold continuously in the course of your taxable activity. They include such items as raw materials, electricity, insurance, telephone costs and running costs for a car.

Capital or asset items

Capital or asset items are items used to run the business but not expected to be used up in the normal operations of the business. Examples are motor vehicles, computers and machinery.

How to calculate it

How to calculate the adjustment for revenue or expense items

The table below explains how to calculate the adjustment for the revenue or expense item and provides an example.

Scenario:

Tai owns a personal computer which he uses for his partnership to record debtors and creditors. Records show 15% of computer use relates to business. The partnership has a six-monthly taxable period.

Step What to do Example
1

Work out the percentage of business (taxable) use.

Business use percentage for the period is 15%.

2

Add up expenses for the six-month period. Call this E.

Total expenses including GST involved in running the computer for the six-month period were:

Maintenance

$475

Electricity

$250

Insurance

$300

Total

$1,025

3

Multiply E by the business percentage from Step 1.

$1,025 x 15% = $153.75

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 "Business use of private/exempt goods and services for annual or period-by-period adjustments".
  • Transfer the totals to Box 13 on your GST return.

$153.75 divide by 9 = $17.08.

How to calculate the adjustment for capital or asset items

The table below explains how to calculate the adjustment for capital or asset items and provides an example.

Step What to do Example
1

Work out the percentage of business (taxable) use.

Business use percentage for the period is 15%.

2

Work out the lesser of the:

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

Call this L.

The current market value of the computer is $3,000, but Tai bought it at a discounted price of $2,500 (including GST).
The lesser of cost or market value is $2,500.

3

Find out the straight line depreciation rate for the asset. Call this S.

The general straight line depreciation rate used is 30%.

4
  • Multiply L by S,
  • divide by the number of taxable periods per tax year, and
  • multiply by percentage of business use from Step 1.

$2,500 x 30% = $750

$750 divide by 2 = $375

$375 x 15% = $56.25

5

Divide the amount from Step 4 by 9.

$56.25 divide by 9 = $6.25

6
  • Add the expense adjustment ($17.08) to the asset adjustment ($6.25). This is your GST adjustment.
  • Show this GST adjustment on your GST adjustments calculation sheet (IR372) under "Business use of private/exempt goods and services for annual or period-by-period adjustments".
  • Transfer the totals to Box 13 on your GST return.

$17.08 + $6.25 = $23.33

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