Quick Summary
From 1 April 2023, for goods or services acquired for $10,000 or less (excluding GST), businesses in New Zealand can choose to use either the principal purpose method or the apportionment method for claiming GST. This provides flexibility in how businesses manage GST for smaller value items used for both business and private/exempt purposes.
Details
Simplified Adjustments for Lower-Value Assets
Effective 1 April 2023, new rules simplify GST adjustments for goods and services with a value of $10,000 or less (excluding GST). This change aims to reduce compliance burden for businesses.
- Choice of Method: You have two options for claiming GST:
- Principal Purpose Method: You can claim GST based on whether the primary use of the goods/services is for your taxable activity (business) or not.
- Apportionment Method: You can apportion the GST claim based on the actual percentage of business use versus private or exempt use.
- Context: This flexibility applies to items that may have mixed-use components (e.g., a tool used sometimes for work, sometimes for personal projects).
- Benefit: The choice allows businesses to select the method that best reflects their usage and simplifies their accounting for lower-value acquisitions.
Source: GST guide (IR375)