If your koha is an unconditional gift you do not have to pay GST on it. An unconditional gift is a voluntary payment to a non profit body that does not benefit the payer or giver in the form of goods or services.
If the koha, such as payments, goods or services are not an unconditional gift they will be liable for GST.
Deciding if your koha is liable for GST
Using the unconditional gift rule will let you know whether your koha is liable for GST. To help you decide, we’ve added some examples below. They’re based on a non profit marae registered for GST.
GST on marae member payments
When a marae member gives money, goods or a service (koha) to their marae and expects nothing in return, then it is not subject to GST or liable for income tax.
Types of payments not taxed are:
- money given to bereaved family or committee at a tangihanga or hura kōhatu
- money given to a married couple or committee at a mārena
- koha given to a marae committee to assist in paying for a building house or church
- visitors on a marae giving a collection to donate to the marae committee
Types of payments that must be taxed are:
- a government department giving payment on a marae
- tourists given a tour on a marae for a fee
- fund raising activities by marae committee
- a marae building is made available for a function in exchange for koha.
Lee buys a bungalow for $230,000, with $30,000 GST claimed. She intends to do it up and sell it for a profit. When the renovation is completed, the market value of the property is up to $360,000, but the property market has taken a dive. Lee decides to rent out the residential property (non-taxable use for GST purposes) to a third party until the market improves and can be sold (taxable use) for a better price. From a GST perspective, the residential property is now used concurrently for the taxable sale and non-taxable residential rental purposes and an adjustment is required. The rental income is $26,000. At the end of the first adjustment period, the adjustment is:
$360,000MV/$386,000 (MV + rental) x 100 = 93% so entitled to retain 93% or original input claimed
GST initially claimed of $30,000 x 7% = $2,100
The $2,100 is an adjustment that must be paid back when the next return is filed.
Lee buys a bungalow for $230,000, with $30,000 GST claimed. She intends to do it up and sell it for a profit. When the renovation is completed, the market value of the property is up to $360,000, but the property market has taken a dive. Lee decides to rent out the residential property (non-taxable use for GST purposes) to a third party until the market improves and can be sold (taxable use) for a better price. From a GST perspective, the residential property is now used concurrently for the taxable sale and non-taxable residential rental purposes and an adjustment is required. The rental income is $26,000. At the end of the first adjustment period, the adjustment is:
$360,000MV/$386,000 (MV + rental) x 100 = 93% so entitled to retain 93% or original input claimed
GST initially claimed of $30,000 x 7% = $2,100
The $2,100 is an adjustment that must be paid back when the next return is filed.
Lee buys a bungalow for $230,000, with $30,000 GST claimed. She intends to do it up and sell it for a profit. When the renovation is completed, the market value of the property is up to $360,000, but the property market has taken a dive. Lee decides to rent out the residential property (non-taxable use for GST purposes) to a third party until the market improves and can be sold (taxable use) for a better price. From a GST perspective, the residential property is now used concurrently for the taxable sale and non-taxable residential rental purposes and an adjustment is required. The rental income is $26,000. At the end of the first adjustment period, the adjustment is:
$360,000MV/$386,000 (MV + rental) x 100 = 93% so entitled to retain 93% or original input claimed
GST initially claimed of $30,000 x 7% = $2,100
The $2,100 is an adjustment that must be paid back when the next return is filed.