Before you start
To work out the change-in-use adjustment you will need the:
- amount of the original GST claim
- % of business use originally claimed
- % of business use for each adjustment period.
Work out the total percentage of business use since date of acquisition
To work this out you need to use the calculation:
Business use % x (months in the adjustment period/months since date of acquisition)
Add the result for each calculation together to get the total business use % since date of acquisition.
Subtract the total business use percentage from the original percentage claimed
The figure you get is the total change in business use percentage since date of acquisition.
Multiply the amount originally claimed by the total business use percentage
The figure you get is the amount you need to claim or pay depending on if there is an increase or decrease in business use.
In October 2012, Peter acquires a luxury boat for $800,000 plus GST. On acquisition, he estimated that the boat would be used 100% for charters (a taxable activity). As a result, full input tax credit is claimed.
For the second adjustment period, the boat was only used 80% for taxable activities.
October 2012 (boat acquired)
The percentage of intended use is 100%. The amount of input tax claimed is $120,000, which is $800,000 x 15%.
March 2013 (end of first adjustment period)
In the first adjustment period of 6 months, Peter used the boat 100% for charters. As this is the same amount as his intended use, no change-in-use adjustment is required.
31 March 2014 (end of second adjustment period)
The second adjustment period lasts for 12 months and ends on 31 March 2014. In this period, Peter used the boat 80% for charters and 20% for personal use (a non-taxable activity). As his use of the boat for taxable activities has changed by more than 10%, Peter must make a change-in-use adjustment.
The percentage of actual use over the 18 months since Peter acquired the boat can be calculated as such:
(100% × 6 months/18 months) + (80% × 12 months/18 months)
33.33 + 53.33 = 86.66%
The percentage of actual use can then be used to calculate the change-in-use adjustment.
(Original intended use percentage - percentage of actual use since acquisition) × original input tax deduction
For Peter, this is:
(100% - 86.66%) × $120,000 = $16,008
In the second adjustment period, Peter must account for $16,008 output tax for the non-taxable use of the boat.
What happens next
- You should use the calculated value as an adjustment on your GST return. You can file your return and make payments in myIR.
- You can fix any mistakes you make in your return after you've submitted it.
- You can use our disputes process if you disagree with our assessment.
Make sure you send us your return by the due date.