Quick Summary
For goods and services valued over $10,000 (excluding GST) used for both business and private/exempt purposes in New Zealand, more rigorous GST adjustment rules apply. You must use the apportionment method, tracking actual use, and make regular adjustments over specified periods to reflect any changes in the percentage of taxable use.
Details
GST Adjustments for Higher-Value Acquisitions
When a New Zealand business acquires goods or services exceeding $10,000 (excluding GST), and these items are used for both taxable (business) and non-taxable (private or exempt) activities, specific and typically more frequent GST adjustments are required.
- Mandatory Apportionment: Unlike items under $10,000 where you have a choice, for items over this threshold, you generally must use the apportionment method.
- Tracking Actual Use: This requires maintaining robust records to accurately track and determine the actual percentage of use for your taxable activity versus private or exempt use.
- Regular Adjustments: These higher-value assets are subject to adjustment periods. If the percentage of taxable use changes significantly during these periods, you'll need to make an adjustment in your GST return to either claim more GST or repay some previously claimed. The number and value thresholds for these adjustment periods have been changed from 1 April 2023 to simplify the process for items $20,000 or less.
- Wash-Up Rule: A 'wash-up rule' and a 'final adjustment on disposal' are also relevant for such assets.
Source: GST guide (IR375)