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Bachs, boats and aircraft: How are these ‘mixed use assets’ taxed?

Bachs, boats and aircraft: How are these ‘mixed use assets’ taxed?

11 Jun 2014

If you’ve been snared by the mixed-use asset rules, then it would be a fair to assume that you’re going to be paying more tax, repaying some GST if you claimed GST when you purchased the asset, and spending more on tax compliance costs.

A quick recap: On 1 April 2013 new tax rules came into force for taxpayers with baches or boats used for both private and business purposes. Similar rules were applied to airplanes and helicopters a year later on 1 April 2014. These items are classified as mixed use assets if they:

Are used both privately and for income earning purposes;
Are not used for at least 62 days in an income year;
Have a cost price of more than $50,000; and
Are held by an individual, partnership, trust or close company.

In our experience there are generally three scenarios when an asset falls within these rules:

When a bach or boat is rented out to third parties and the owner for market value. The use by the owner is now deemed to be private use.
When an airplane or helicopter is held in a private company (which has other investments or is an operating company) and is rented out to third parties and the owner for market value. The use by the owner i

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