Verified for 2026 Tax Year

Farming & Agriculture GST

Q: What is the Type 1 vs Type 2 Farmhouse rule?

If the farmhouse is owned by the farming entity: Type 1 (Value > 20% of farm) means you can only claim 20% of farmhouse expenses. Type 2 (Value < 20% of farm) means you can claim 100% of farmhouse expenses for GST.

Q: Do I charge GST when selling livestock to the Meat Works?

Yes, it is a taxable supply. However, the Meat Works will usually issue a Buyer Created Tax Invoice (BCTI), so you do not need to issue your own invoice to avoid double counting the GST.

Q: Is selling a farm subject to 15% GST?

When buying or selling a farm, it is almost always zero-rated (0% GST) as a 'Going Concern'. However, the farmhouse (curtilage) is often excluded from the zero-rating and treated as a separate, GST-exempt residential transaction.

Navigating the Farmhouse deduction rules (20% rule), livestock BCTIs, and zero-rating land transfers as a going concern.

Farms are unique businesses because the business premises is often the family home. Getting the GST apportionment right for the farmhouse is one of the most common audit triggers for rural accountants in New Zealand.

The Farmhouse Apportionment Rule

If the farmhouse is owned by the farming entity (e.g., Company, Trust, or Partnership), you can claim a portion of the GST on the house expenses (R&M, power, insurance). The IRD categorizes this into two types:

✓ Type 1 (Value > 20% of farm): You can only claim a maximum of 20% of the farmhouse expenses. (Typical for small lifestyle blocks).
✓ Type 2 (Value < 20% of farm): You can claim 100% of the farmhouse expenses. (Most large commercial farms fall here).

Selling a Farm (Going Concern)

Total Farm Sale Price: $5,000,000

The Working Farm

Value: $4,500,000

Zero-Rated (0% GST)

The Farmhouse (Curtilage)

Value: $500,000

Exempt (No GST)

Livestock Sales & BCTIs

Selling livestock (sheep, cattle, dairy) is a taxable supply. You must charge 15% GST.

However, if you sell to a Meat Works (e.g., Affco, Silver Fern Farms), their accounting software will automatically issue a Buyer Created Tax Invoice (BCTI) on your behalf.

Important: Do not issue your own tax invoice if a BCTI is provided, otherwise you will accidentally double-count your GST liability with the IRD.

The Private Consumption Trap

If you take "home kill" meat, milk, or produce from the farm for your own family's private consumption, you must make a GST adjustment. You are legally required to pay GST to the IRD on the market value of that stock, as it was removed from the taxable supply chain.

Frequently Asked Questions

What is the Type 1 vs Type 2 Farmhouse rule?

If the farmhouse is owned by the farming entity: Type 1 (Value > 20% of farm) means you can only claim 20% of farmhouse expenses. Type 2 (Value < 20% of farm) means you can claim 100% of farmhouse expenses for GST.

Do I charge GST when selling livestock to the Meat Works?

Yes, it is a taxable supply. However, the Meat Works will usually issue a Buyer Created Tax Invoice (BCTI), so you do not need to issue your own invoice to avoid double counting the GST.

Is selling a farm subject to 15% GST?

When buying or selling a farm, it is almost always zero-rated (0% GST) as a 'Going Concern'. However, the farmhouse (curtilage) is often excluded from the zero-rating and treated as a separate, GST-exempt residential transaction.

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