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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