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Quick Summary
From 1 April 2023, businesses in NZ can formally elect to treat goods as non-taxable supplies if their primary use is not for a taxable activity. This means you wouldn't claim GST on their acquisition, simplifying ongoing GST adjustments for items predominantly used for private or exempt purposes.
Detailed Explanation
Making the Election for Non-Taxable Supplies
The ability to elect goods as non-taxable supplies, introduced on 1 April 2023, provides an administrative simplification for New Zealand businesses. This election is relevant when goods are acquired but their main intended use is not for the business's taxable operations.
- When to Elect: You can make this election when you acquire goods whose principal purpose is not for use in your taxable activity. For example, if you buy a vehicle primarily for personal use, with only incidental business use.
- Consequence of Election: By making this election, you are choosing not to claim any input tax (GST) on the acquisition of these goods.
- Benefit: This simplifies your GST accounting because you avoid the need for ongoing apportionment and adjustment calculations for an item that is predominantly for non-taxable use.
- Documentation: While the guide doesn't specify a formal election process, it implies a business decision and a corresponding treatment in your GST records. Ensure your accounting reflects this election clearly.
Official Source / Citation:
GST guide (IR375)