Types of mixed-use expenses
Fully deductible expenses
You can claim deductions and GST for 100% of any expense that relates solely to the income-earning use of the asset. For example, costs of advertising for guests for your holiday home, costs of repairs when your boat was damaged during a charter trip.
You cannot claim any expenses or GST that relate to private use of the asset. For example, costs of a quad bike stored in a locked garage and unavailable to the people renting your holiday home.
If an expense relates to both income-earning use and private use, you need to apportion it between those two uses.
Private use of an asset
Private use of your mixed-use asset means use by:
- you, your family or associated people, regardless of whether they pay you
- non-associated people if they pay you less than 80% of market rates for the use of the asset.
Payment for private use is exempt income. Expenses relating to private use are not deductible.
Income-earning use means use by a non-associated person who pays you 80% or more of market rates for the use of the asset.
Income-earning days include any days you spend either occupying or using the asset to:
- repair damage to the asset, provided the damage occurred on an income-earning day
- relocate the asset, provided you're paid to do so.
For GST, income-earning days includes all days any consideration is received, no matter the percentage of market rate paid.