Calculate a one-off adjustment of private assets used in business
When to use it
You can make a one-off adjustment when:
- there is a change in the use of an asset costing less than $18,000 from private to business, or
- a private asset costing less than $18,000 is acquired but is sometimes used for the business.
Note
The adjustment is based on the estimated taxable use over the life of the asset.
How to calculate it
The table below explains how to calculate the one-off adjustment for a private asset costing less than $18,000 used in business and provides an example.
Scenario: David, a farmer, buys a horse float for $15,000, intending to use it for 25% business and 75% private purposes. Its current market value is $12,000.
| Step | What to do | Example |
|---|---|---|
| 1 |
Work out the percentage of business (taxable) use. Call this T. |
25% |
| 2 |
Work out the lesser of the:
Call this figure L. |
$12,000 |
| 3 |
Multiply L by T. |
$12,000 x 25% = $3,000. |
| 4 |
|
$3,000 divide by 9 = $333.33 |
Private assets used in business costing more than $18,000
You can apply in writing for a one-off input tax adjustment for assets costing over $18,000, where a 100% change of business use occurs, if:
- you have previously made one-off input tax adjustments
- you have elected to make one-off output tax adjustments for any previous changes from business to private use, or
- you can prove that making period-by-period or annual adjustments is impractical.
We also take into account the nature of goods and services, for example an asset retained for a number of years, such as property.
Important
If we approve an application for a one-off input tax adjustment and if the business use changes to private use, you must make a one-off output tax adjustment to reflect the private use.
Find out more
- Calculate period-by-period adjustments of private assets used in business
- Calculate the business use of a private motor vehicle
Date published: 17 Apr 2007
Back to top
