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.
Details
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.
Source: GST guide (IR375)