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Goods and Services Tax Act 1985

Returns and payment of tax - Calculation of tax payable: deductions, apportionment, other adjustments

21HB: Transitional rules related to treatment of dwellings

You could also call this:

"Rules for taxing homes bought or sold between 1986 and 2011"

Illustration for Goods and Services Tax Act 1985

If you acquired goods or services between 1 October 1986 and 1 April 2011, you might be able to claim a tax deduction. This is because of changes made by the Taxation (GST and Remedial Matters) Act 2010 to the definitions of commercial dwelling and dwelling. You must be registered under section 51(1) to claim this deduction. You treat the goods or services as acquired on 1 April 2011 at their original cost.

If you supply accommodation in premises that were acquired before 1 April 2011, you can choose not to charge tax on that supply. This choice is only available if the premises met the requirements of the definition of dwelling before the changes made by the Taxation (GST and Remedial Matters) Act 2010. You can only make this choice if the value of your supplies of accommodation does not exceed the threshold value given by section 51(1)(a).

If you are required to treat a dwelling as a commercial dwelling because of the changes, you can choose to continue treating the supply of accommodation as a taxable supply. You can make this choice in your tax return for a period starting before 1 April 2015. You can also choose to treat the supply as an exempt supply, which means you do not charge tax on it, as stated in section 21FB(4)(b).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4008991.

Topics:
Money and consumer rights > TaxesHousing and property > Buying and selling homes
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Part 3Returns and payment of tax
Calculation of tax payable: deductions, apportionment, other adjustments

21HBTransitional rules related to treatment of dwellings

  1. Subsections (2) and (3) apply when goods or services acquired or produced in the period between 1 October 1986 and 1 April 2011 were not acquired or produced for the principal purpose of making taxable supplies but, because of the changes made by section 4(3) and (4) of the Taxation (GST and Remedial Matters) Act 2010 to the definitions of commercial dwelling and dwelling, the goods or services are treated from 1 April 2011 as being used for making taxable supplies. For the purposes of this section, the person must be a person registered under section 51(1) before or after 1 April 2011.

  2. Input tax in relation to the acquisition referred to in subsection (3) may be deducted under section 20(3C) to the extent to which a deduction has not been made under the old apportionment rules.

  3. The person must treat the goods or services as acquired on 1 April 2011 at the original cost of the supply.

  4. A person may choose that a supply of accommodation in premises not be a taxable supply if the premises—

  5. were acquired by the person before 1 April 2011; and
    1. met the requirements of the definition of dwelling immediately before section 4(3) and (4) of the Taxation (GST and Remedial Matters) Act 2010 amended the definitions of commercial dwelling and dwelling; and
      1. do not meet the requirements of the definition of dwelling because of the amendments referred to in paragraph (a).

        1. Subsection (4) does not apply if the value of the person’s supplies of accommodation in premises affected by the amendments exceeds the threshold value given by section 51(1)(a).

        2. Subsection (7) applies to a person who—

        3. is required to treat a dwelling as a commercial dwelling because of the amendments to the definitions of commercial dwelling and dwelling made by section 4(3) and (4) of the Taxation (GST and Remedial Matters) Act 2010; and
          1. on or after 1 April 2011, has treated the supply of accommodation in a dwelling, being a residential unit in a retirement village or rest home, as a taxable supply.

            1. The person may irrevocably choose in a tax return for a period starting before 1 April 2015, to—

            2. continue to treat the supply as a taxable supply for that period and for subsequent periods; or
              1. treat the supply as an exempt supply for that period and for subsequent periods, and for this purpose, the election to treat the supply as an exempt supply does not constitute a change of use for the purposes of section 21FB(4)(b).

                Notes
                • Section 21HB: inserted (with effect on 1 April 2011), on (applying to supplies made on or after 1 April 2011), by section 241(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                • Section 21HB heading: amended, on , by section 192(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                • Section 21HB(1): amended, on (applying to a tax position taken by a person after 22 November 2013), by section 192(2)(a) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                • Section 21HB(1): amended, on (applying to a tax position taken by a person after 22 November 2013), by section 192(2)(b) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                • Section 21HB(4): replaced (with effect on 1 April 2011), on , by section 278 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                • Section 21HB(4)(aa): inserted (with effect on 1 April 2011), on , by section 24 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
                • Section 21HB(5): replaced (with effect on 1 April 2011), on , by section 278 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                • Section 21HB(6): inserted, on (applying to supplies of accommodation in dwellings affected by the amendments that are acquired before that date), by section 192(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                • Section 21HB(7): inserted, on (applying to supplies of accommodation in dwellings affected by the amendments that are acquired before that date), by section 192(4) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
                • Section 21HB(7)(b): amended, on , by section 145 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).