Mixed-use asset rule change explained

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 1st marked 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 April, 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, give us a call - we can help!