Selling business assets to fund a goal: GST, tax and timing

Selling equipment, vehicles or plant your business no longer needs is one of the cleanest funding pieces there is: no lender, no repayments, no security. It’s often the first thing to do when funding a new machine or a bigger goal — the idle assets page covers how to find what’s sitting unused. But the number that goes into your funding mix isn’t the sale price. It’s the cash you keep after GST, any tax on the sale and clearing any finance still attached.

This guide walks through how those pieces work for a New Zealand business, with a worked example. It’s general information; your accountant should check the figures for any significant sale.

Step 1: Is there finance still registered on the asset?

Before you list anything, check whether a lender or supplier holds a security interest over it. The Companies Office explains that the PPSR lets people check whether there’s money owing on pre-owned goods such as vehicles, equipment and machinery — and any serious buyer will search it.

If something is registered:

• Find out the payout figure from the lender.
• Plan for the security to be discharged at settlement, usually by paying the lender from the sale proceeds.
• If the asset is covered by a general security agreement rather than a specific registration, ask your lender to release it from that security for the sale.

The payout comes off the cash you keep, so it belongs at the very top of your calculation.

Step 2: How does GST apply to the sale?

If your business is GST-registered and the asset was used in your taxable activity, selling it is generally a taxable supply. Inland Revenue’s GST guide (IR375, March 2026) includes a worked example of a business asset sold in the course of a taxable activity, where the full sale amount is subject to GST and has to be included in the return.

In practice:

• If you sell for a GST-inclusive price, 3/23 of it is GST. A ute sold for $34,500 including GST contains $4,500 of GST.
• That GST goes in your return for the period of the sale and is paid on that return’s due date — the 28th of the month after the period ends, with the 7 May and 15 January exceptions.
• If you quote a price, be clear whether it’s “plus GST” or “including GST”. Private buyers usually expect GST-inclusive pricing.

Mixed-use assets — say, a vehicle used partly privately — can involve adjustments to the GST calculation. Your accountant can work out the right figure.

Step 3: Is there tax on any gain?

If you’ve claimed depreciation on the asset, its adjusted tax value is the cost less depreciation claimed. Inland Revenue’s depreciation guidance says:

• selling an asset (other than pooled assets) for more than its adjusted tax value creates a profit that must be reported in the year of sale;
• selling for less generally gives you a deductible loss, also recorded in the year of sale;
• you cannot claim depreciation in the year you dispose of the asset;
• for assets with both business and private use, the gain or loss is split in proportion to their use.

The taxable gain is commonly called depreciation recovery — in effect, you’re paying back tax deductions you claimed earlier because the asset turned out to be worth more than its tax value. It’s added to the business’s income for the year, which can affect provisional tax as well as the final tax bill.

A worked example

Illustrative only; describes no real business. Figures are simplified and ignore any mixed use.

A Waikato drainage contractor, GST-registered, sells an older excavator it no longer needs.

Item	Amount
Sale price, GST-inclusive	$57,500
GST in the price (3/23)	$7,500
Sale price excluding GST	$50,000
Adjusted tax value	$38,000
Taxable gain (depreciation recovery)	$12,000
Finance owing on the excavator	$0

Cash in hand on sale: $57,500.

Owed to Inland Revenue later:

• $7,500 of GST in the next GST return.
• Income tax on the $12,000 gain, at the business’s tax rate, via provisional or terminal tax.

If the business is a company taxed at 28% (Inland Revenue’s rate for most companies), tax on the gain is $3,360. So the cash the business truly keeps for its funding mix is roughly $57,500 – $7,500 – $3,360 = $46,640 — about 81% of the headline price. Planning with $57,500 would overstate the funding piece by more than $10,000. If the net figure leaves a gap you need to fill, a real person can look at the remaining piece with you.

If instead the excavator had sold for $40,250 including GST ($35,000 excluding GST), below its $38,000 tax value, the business would have a $3,000 deductible loss, and the net cash kept would be closer to the sale price excluding GST.

How do you time an asset sale?

Timing doesn’t change the tax, but it changes when cash goes out:

• GST: a sale early in a GST period gives you the longest time before the GST is paid. A sale on the last day of a period puts the GST in that period’s return straight away.
• Income tax: a large gain in a year can push up provisional tax. Tell your accountant so instalments can be adjusted, especially if you use the estimation option.
• Replacement purchase: if you’re selling old gear to fund new gear, the GST on the new purchase may be claimable in a period that offsets the GST on the sale. New assets (or assets new to New Zealand) first used from 22 May 2025 may also qualify for Investment Boost, which can reduce tax in the year of purchase.

Should you sell or refinance?

Selling makes sense when you genuinely won’t need the asset again. If it’s still working, or you’d need to buy a replacement soon, asset refinance can release cash while you keep it — without triggering GST on a sale or depreciation recovery. Refinancing does add repayments and registers security over the asset, so it’s a trade-off. A sale and leaseback is a sale for tax purposes, so it brings the GST and depreciation questions back in; get advice before choosing that route.

What about trade-ins?

A trade-in is still a sale of your asset, just to the dealer. The GST and depreciation rules apply in the same way, and the trade-in value should be recorded as the sale price. Trade-ins are convenient — and they reduce the cash you need for the new item — but they often fetch less than a private sale or auction. Compare before you agree. The equipment remix covers how trade-ins fit into a purchase.

A pre-sale checklist

1. Search the PPSR and get a payout figure for any finance.
2. Ask your accountant for the asset’s adjusted tax value.
3. Estimate the sale price and work out GST and any gain or loss.
4. Calculate net cash kept after GST, tax and finance payout.
5. Pick a sale channel: private sale, auction, dealer or industry contact.
6. Time the sale around your GST period and tax dates where you can.
7. Record the sale correctly so the GST return and income tax return pick it up.

How does this fit into a funding mix?

Asset sales are one of the early pieces in ordering your funding sources: money you already own, released without a lender. Combined with debtor collection and stock clearance — see freeing up cash before borrowing — they can shrink a funding gap considerably. The net cash figure from this guide is what you plug into the funding remixer or your forecast. And if a sale creates a lump of GST or provisional tax, the GST and provisional tax remix covers smoothing it.

Need to fund what the sale doesn’t cover?

Once you know the net cash an asset sale will really release, the rest of the gap is clear. If it needs finance, tell us about the goal and the gap. You won’t get a credit check for asking, your enquiry stays with one real person rather than being handed to a crowd of lenders, and we’ll talk through which piece fits. Please use your net figures on the form — it’s the fastest way to the right answer.