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Change-in-use adjustments for assets acquired before 1 April 2011

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You will need to make adjustments under the old rules for goods and services other than land until certain dates. After these dates, no further adjustments are required, even if the goods and services are still held.

If the market or book value of the supply is:

  • $5,000 or less - make adjustments until 31 March 2011
  • $5,001 to $10,000 - make adjustments until 31 March 2013
  • more than $10,000 - make adjustments until 31 March 2016.

Business assets used privately

There are 3 ways you can work out your adjustments if you have any private use of business supplies.

One-off adjustment

You use a one-off adjustment when either:

  • you acquire a business asset that will be used privately
  • there is a change-in-use of an asset from business to private.

You can make a one-off adjustment in the period you acquired the asset, or the change-in-use occurred. You must make an additional one-off adjustment if there is either a:

  • total change in use
  • change of 20% or more (either an increase or decrease).

The one-off adjustment calculation is:

Purchase price x estimated private use as a percentage x 3 then divided by 23

Period-by-period adjustment

If you make period-by-period adjustments, you make the private use adjustment in the GST return that covers the time the assets were used privately.

There are 2 types of period-by-period adjustments.

Revenue or expense item adjustments

Work out a revenue or expense item adjustment using the following calculation.:

  1. Work out the % of private use.
  2. Find out the GST-inclusive cost and market value. Use the lower amount.
  3. Multiply the amount by the private use %.
  4. Multiply the new figure by 3, divide by 23.

Asset adjustments for sole traders

If you're a sole trader, work out the asset adjustment using the following calculation:

  1. Work out the % of private use.
  2. Find out the GST-inclusive cost and market value. Use the lower amount.
  3. Find out the asset's straight line depreciation rate.
  4. Multiply the cost or market value by the depreciation rate divide by number of taxable periods in the year multiplied by private use %.
  5. Multiply the amount by 3 divide by 23.

Asset adjustments for partnerships and trusts

When an associated person of a partnership or trust uses an asset privately, the adjustment is worked out as though the asset was leased to the associated person. If your business is a partnership or trust, work out the asset adjustment using the following calculation.

  1. Work out the % of private use.
  2. Find out the current market value of the asset, excluding GST.
  3. Work out the interest for 3 years on the current market value at 6%.
  4. Work out the value of the asset after 3 years of diminishing value depreciation. This is the residual value of the asset.
  5. Combine the market value and interest then subtract the residual value. This represents a 36-month lease.
  6. Work out the lease amount for the current taxable period then add 15% GST
  7. Multiply this amount by the private use %.
  8. Multiply this amount by 3 divide by 23.

Annual adjustment

Work out the annual adjustment using the following calculation:

  1. Work out the market value of the asset.
  2. Find out the asset's straight line depreciation rate.
  3. Work out the GST using the straight line depreciation rate then multiply by private use %.
  4. Multiply the amount by 3 divide by 23.

When you can make the adjustment depends on if you have a tax agent.

If you do not have a tax agent

Make the adjustment in the GST return that covers when your income tax return is filed, or due to be filed.

If you have a tax agent with no extension of time for income tax

Make the adjustment in the GST return covering the earlier of either:

  • the date your income tax return is filed
  • 31 March after the due date for your income tax return.

If you have a tax agent with extension of time for income tax

Make the adjustment in the GST return that covers that date your income tax return was prepared or filed.