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.
April 1 marks a significant change in the GST tax treatment of mixed-use assets.
Taxpayers can claim 100% of GST for expenses relating to the income-earning use of a mixed-use asset, for example, the cost of advertising a holiday home online.
However, working out GST claims for expenses relating to both the income-earning and private use of the asset has been more difficult to establish.
In the past, a complex calculation has been needed to apportion GST expense claims relating to both income-earning and private use.
As of this month, GST calculations for mixed-use assets have been simplified. You no longer need to use the old method and general apportionment and adjustment rules will apply instead. The mixed-use asset rules for income tax will still apply.
Remember, if you have a mixed-use asset, such as a boat, bach, or plane, please keep records on how and when it is used for business or private purposes.
If you’re unsure about these changes, feel free to get in touch with us.