Goods and Services Tax Act 1985

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

21FB: Treatment when percentage of taxable use permanently changes

You could also call this:

"What to do when you change how much you use something for business"

Illustration for Goods and Services Tax Act 1985

If you use goods or services to make taxable supplies, and the percentage of taxable use changes permanently, this rule applies to you. You need to calculate an adjustment for the period when the change happened, using a formula that takes into account the full input tax deduction, the new intended use percentage, and the previous net deductions. The full input tax deduction is the total amount of input tax on the supply, after considering any nominal GST component chargeable under section 20(3J)(a)(i).

You calculate the new intended use percentage by looking at how you used the goods or services from the date of the permanent change to the end of the adjustment period, and how you intend to use them in the future. The previous net deductions are the input tax deductions you claimed when you got the goods or services, plus or minus any adjustments you made before.

If the amount you calculate is positive, you are entitled to an additional input tax deduction under section 20(3)(e). If the amount is negative, you must treat it as output tax and attribute it to a taxable period under section 20(4).

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This page was last updated on 18 July 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS851151.

Topics:

Money and consumer rights > Taxes

21F: Treatment on disposal, or

"What happens with GST when you get rid of business goods or services"

21G: Definitions and requirements for apportioned supplies and adjustment periods, or

"Rules for working out business and personal use of things you buy for your business"

Part 3Returns and payment of tax
Calculation of tax payable: deductions, apportionment, other adjustments

21FBTreatment when percentage of taxable use permanently changes

This section applies where the person’s use of goods or services in making taxable supplies, as a percentage of total use, permanently changes.
The person’s adjustment for the adjustment period in which the change occurred is an amount calculated using the formula—
$full input tax deduction × new intended use percentage − previous net deductions.$

Where:
In the formula,—
full input tax deduction is the total amount of input tax on the supply, after taking into account any nominal GST component chargeable under section 20(3J)(a)(i):
new intended use percentage means the extent to which the goods or services are used, determined by the use from the date the permanent change occurred up to the end of the adjustment period in which the change occurred, and intended to be used for the foreseeable future, by the person for making taxable supplies:
previous net deductions means the input tax deduction claimed by the person on acquisition of the goods or services after taking into account any nominal GST component chargeable under section 20(3J)(a)(i) which has not previously been returned as output tax under section 20(3J)(a)(iv), plus or minus, as the case may be, any previous adjustments made.

For the purposes of subsection (2),—
if the amount is positive, the person is entitled to an additional input tax deduction under section 20(3)(e); or
if the amount is negative, the person must treat the amount as a positive amount of output tax and attribute it to a taxable period under section 20(4).

Notes

Section 21FB: replaced, on 1 April 2023, by section 143(2) (and see section 143(3) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).