Mixed Use Asset Rule explained
Posted on 07 Jun 2024
Do you have a holiday home which you also rent out commercially? Or do you own a boat or a plane which you use privately as well as renting out for charter or other commercial purposes? These are known as mixed use assets.
A mixed-use asset adjustment splits the use of the assets into business or private use. GST can be claimed on the business use. The current calculations can be complex so the IRD has introduced some simplifications in the latest tax legislation.
In the recent changes, businesses now have the option to use standard apportionment rules where they claim the % used in a taxable activity. eg: Total days of business use/total days in the year or kilometres for business use/total kilometres travelled.
However, while the calculations may have been simplified, there are examples where the new options may result in more tax to pay - and so should be considered carefully. Keep in mind also that claiming GST on the way in results in GST payable on the way out.
We recommend that you review all options available prior to making a choice and please talk to us if you have any questions or doubts
