Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Deductions - Expenditure related to use of certain assets

DG 20: When income cannot be separately attributed

You could also call this:

“When income from using an asset in business can't be separated out”

When you use an asset in a business activity, sometimes you can’t separate out how much income comes just from using that asset. In this case, you don’t have to follow the rules in sections DG 16 and DG 18.

However, there’s an exception to this. If you also use the asset in a way where you can figure out exactly how much income it brings in, and this use is at least 80% of the total use of the asset, then you still need to follow those rules.

For example, if you use a boat for fishing trips (where you can’t easily say how much money comes just from the boat) and also rent it out (where you know exactly how much money it brings in), you might still need to follow the rules if the rental use is 80% or more of the total use.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM5494588.

Topics:
Money and consumer rights > Taxes
Previous

DG 19: Allocation of amounts quarantined under section DG 18, or

“Using previously set-aside money for expenses based on current year's profit”

Next

DG 21: Opting out of treatment under this subpart, or

“How to opt out of tax rules for small amounts of income from asset use”

Part D Deductions
Expenditure related to use of certain assets

DG 20When income cannot be separately attributed

  1. Sections DG 16 and DG 18 do not apply to the use of an asset for an income year when—

  2. the person derives an amount of income for the income year from the use of the asset in a business activity; and
    1. because of the nature of the activity, an amount cannot be separately attributed to the use of the asset.

      1. Subsection (1) does not apply if—

      2. the person also uses the asset in deriving an amount of income that is separately attributable to the use of the asset; and
        1. the use of the asset referred to in paragraph (a) is at least 80% of the total use of the asset both in the business activity referred to in subsection (1) and as described in paragraph (a).

          Notes
          • Section DG 20: 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).