GST (Goods and services tax) Te tāke hokohoko

In this section

## GST (Goods and services tax)

### Registering for GST

GST adjustments from 1 April 2011

Apportionment methods

Depreciation rates

GST on exempt, zero-rated, special supplies and receiving remote services

# Apportioning input tax when goods and services are acquired

When goods and services are acquired on or after 1 April 2011 a claim for input tax is allowed depending on the extent to which goods or services are:

• used for, or
• are available for use

in making taxable supplies.

At the time they are acquired, an estimate of the intended use is made by choosing a method that provides a fair and reasonable result. This can be based on:

• previous records
• experience
• any other suitable method.
##### Example

John purchases a new car for \$46,000 (including \$6,000 GST). He keeps a logbook for the old car showing it was used 70% for business purposes. The ratio of 70% is not expected to change for the new car. He claims \$4,200 input tax, ie \$6,000 x 70% equals \$4,200

There is no requirement to apportion the input tax in an adjustment period if:

• both taxable and exempt supplies are made, and
• the expected value of the exempt supplies will not be more than:
• the lesser of \$90,000, or
• 5% of the total consideration for all their taxable and exempt supplies for the adjustment period.

#### Apportioning zero-rated goods and services

When zero-rated supplies are purchased, special rules now apply to determine the GST component to account for the amount of output tax that is payable on non-taxable use. An adjustment is made based on the following criteria:

1. identify the amount of GST that would have been changed if the zero-rating did not apply
2. determine as a percentage the extent to which goods are intended to be used for making taxable supplies
3. account for the output tax on the percentage that is attributable to the non-taxable use of the goods.
##### Example

A 5 storey building is purchased in the city for \$20 million. GST is zero rated.

The ground floor of the building (25%) is leased as shopping space - this is a taxable supply. The remaining 75% is leased as residential apartments - this is non-taxable.

The GST component on the building, if it was not zero-rated, is \$3m (\$20m x 15%). The percentage of the building used as shopping space that is a taxable supply is 25%

The taxpayer must account for output tax on the remaining 75% non-taxable use of the building, amounting to \$2.25m (\$3m x 75%).

### Find out more

You can find more information in our Tax Information Bulletin, Vol 23, No1, February 2011.