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Income Tax Act 2007

Deductions - Expenditure related to use of certain assets

DG 4: Meaning of private use for this subpart

You could also call this:

“What counts as personal use of an asset for tax purposes”

Private use of an asset means when you or someone close to you uses the asset. This applies even if you don’t use it all the time or if you’re not making money from it. It also counts as private use if you’re making less than 80% of the normal amount of money from it.

However, it’s not private use if you’re using the asset to make money and you only use it for work or your job. It’s also not private use if you’re fixing damage to the asset that happened while you were using it to make money, as long as the damage isn’t just normal wear and tear.

If you need to move the asset to use it for making money, that’s not considered private use either. This is true as long as you’re paid for moving it and the move is necessary for making money.

Remember, if you’re not paying tax on the money you make from using the asset, these rules don’t apply. You can check section CW 8B to see how certain amounts of money from using assets are treated.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5494511.

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Money and consumer rights > Taxes
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Part D Deductions
Expenditure related to use of certain assets

DG 4Meaning of private use for this subpart

  1. For the purposes of this subpart, private use of an asset—

  2. means the use of the asset by a person described in subsection (2), whether or not—
    1. the use is exclusive:
      1. an amount of income is derived in relation to its use:
      2. includes the use of an asset when income derived in relation to the use of the asset is an amount that is less than 80% of the market value amount:
        1. excludes the use of the asset referred to in subsections (3) to (5).

          1. The person referred to in subsection (1)(a) is a natural person who—

          2. owns, leases, licenses, or otherwise has the asset:
            1. is associated with a person who owns, leases, licenses, or otherwise has the asset.

              1. The use of an asset is not private use if—

              2. the asset is used to derive income for a particular period; and
                1. during the period, use of the asset by the person is limited to:
                  1. use in the ordinary course of business:
                    1. deriving the person’s employment income.

                    2. The use of an asset is not private use if—

                    3. the asset is used to derive income for a particular period; and
                      1. damage is caused to the asset during the period; and
                        1. the damage is not the result of ordinary wear and tear; and
                          1. the person uses the asset after the end of the period to repair the damage; and
                            1. the use of the asset referred to in paragraph (d) is necessary in order for the person to carry out the repairs.

                              1. The use of an asset is not private use if—

                              2. the asset is used to derive income for a particular period in an income year; and
                                1. the person uses the asset before the start of the period, or after the end of the period, or both, to relocate the asset; and
                                  1. the use referred to in paragraph (b) and the relocation of the asset are necessary for the income-earning purposes; and
                                    1. the income the person derives for the income year from the use of the asset includes an amount payable for the cost of relocation.

                                      1. Subsections (3) to (5) do not apply if the person derives an amount of exempt income in relation to the use of the asset. For the treatment of certain amounts of income derived from the use of assets as described in this section, see section CW 8B (Certain amounts derived from use of assets).

                                      Notes
                                      • Section DG 4: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on , by section 30(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                                      • Section DG 4(2): replaced (with effect on 1 April 2013 and applying, for the 2013–14 and later income years, for an item of property referred to in section DG 3(2)(a)(i); for the 2014–15 and later income years, for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on , by section 101(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                                      • Section DG 4(3): replaced (with effect on 1 April 2013 and applying, for the 2013–14 and later income years, for an item of property referred to in section DG 3(2)(a)(i); for the 2014–15 and later income years, for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on , by section 101(2) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).