Question

Which of the following is a taxable activity? why is correct and why are not correct?

Renting out an office in Marton for $5,000 per annum.

(b)       Renting out a residential house in Auckland for $62,400 per annum.

(c)        Lending $500,000 on a mortgage on a house for $27,000 interest per annum.

(d)       Selling a house which you have inherited from your deceased grandmother for $800,000.

Answer 1

A taxable activity are those that are carried out regularly or spread over a period of time. Activities that take place only once, are not taxable.

a. Rent that is received in lieu of renting a commercial or housing property is taxable after deducting certain direct expenses related to it. Thus $5000 received per annum will be taxable.

b. Rent that is received in lieu of renting a commercial or housing property is taxable after deducting certain direct expenses related to it. Thus $62,400 received per annum will be taxable.

c. In cases of mortgage the principal amount is not taxable while the interest that is paid, that is $27,000 is taxable.

d. Selling an ancestral property is not taxable. But if their is any gain on selling such property, the gain is taxable.