Homing in on GST

The following questions and answers were selected from the CCH Question and Answer Service. For further details visit the CCH website or phone CCH on 0800 500-224.

Q: If I buy a residential property in my name which is to be used solely as my company's office, can the company claim the GST on the power, rates, telephone, insurance and repairs etc at 100 per cent?

I am not now living at the property but will eventually move into it. When I do, I will apportion the business/private use.

A: Yes, the company can claim 100 per cent of the GST in respect of these expenses. The goods and services were acquired for the principal purpose of making taxable supplies. As they are not applied for any other purpose tthere is no requirement to make an adjustment.

It is not clear from your question whether the company is paying rent to you. If not, you need to be aware a potential gift duty problem.

Q: Are gifts such as wine and flowers given to clients on the completion of a sale (such as the sale of a house by a real estate agent) deductible for income tax purposes?

A: It depends on what the gifts are. Gifts of food or beverages may fall within the entertainment regime - then the deduction is limited to 50 per cent. Other gifts, such as flowers, should be 100 per cent deductible.

CCH New Zealand