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## GST (Goods and services tax)

### Registering for GST

GST adjustments from 1 April 2011

Apportionment methods

Depreciation rates

GST on exempt, zero-rated, special supplies and receiving remote services

# Calculate the adjustment for the business use of a private motor vehicle

For the business use of a private motor vehicle the same three options apply as for other private goods or service.

### How to calculate the adjustment for the business use of a private motor vehicle using the period-by-period GST adjustment

The table below explains how to calculate the adjustment for the business use of a private motor vehicle using the period-by-period GST adjustment.

##### Scenario:

James uses his private car for business use. The cost of the car was \$40,000 and its present market value is \$30,000. His three-month logbook test period showed 30% business use. The last two months' total running costs for the car including GST were \$1,385, including:

• insurance \$135
• petrol \$1,000
• repairs \$150
• registration \$100

Step What to do Example
1

Work out the asset's market value.

The vehicle's market value is \$30,000.

2

Find out the straight line depreciation rate for the asset.

The straight line depreciation rate for this vehicle is 18%.

3

To work out the value of the business use revenue item adjustment, ie to adjust for running costs, multiply the running costs for the asset for the taxable period by business use percentage.

\$1,385 x 30% = \$415.50

4

• multiply the asset's market value by the asset's straight line depreciation rate in percentage
• divide by the number of taxable periods per tax year, and
• multiply by business use percentage.

\$30,000 x 18% = \$5,400

\$5,400 divide by 6 = \$900

\$900 x 30% = \$270

5

• transfer the totals to Box 13 on your GST return.

\$270 + \$415.50 = \$685.50

\$685.50 divide by 9 = \$76.17

### How to calculate the adjustment for the business use of a private motor vehicle using the annual GST adjustment

##### Scenario:

James contacts his tax agent to discuss his GST adjustment options. His agent advises him to cease making period-by-period adjustments. He explains that he would calculate James' annual adjustment at the time he prepares his income tax return.

James receives a full breakdown of his annual GST adjustment for his car from his tax agent. The figure is \$456.96 which is one-ninth of the total of his business use. This was calculated using the capital and revenue adjustment method. This annual adjustment covers the period of a tax year from 1 April to 31 March.

James was aware he had already claimed some period-by-period adjustments in his GST returns for the periods ending May, July and September of that tax year. James refers to his paperwork and established that he had claimed a total GST adjustment of \$228 (one-ninth of \$2,052) for the above periods. James must deduct what he has already claimed.