GST on second-hand goods

Let’s say you’re running a landscaping business and want to purchase a lawnmower. You decide to save on costs and buy a pre-owned one. Chances are, you’ll find yourself asking: how do I deal with the GST on second hand goods? ​

We often receive questions from business owners on this topic. What if you’re not GST registered? What if the seller doesn’t provide a tax invoice? How much can you claim back? Things can get tricky, so let’s cover the basics you need to know.​

In Australia, purchasing second hand goods generally falls into one of the three categories:​

If you purchase second hand goods that aren’t for the purpose of reselling, and from an entity that’s not registered for GST (such as a private individual on Facebook Marketplace), you can’t claim GST. You also can’t claim any GST back on the purchase. These goods should be labelled as ‘GST free’ when reconciling your GST and preparing BAS.​

If you purchase second hand goods for the purpose of reselling, and from a private individual, the goods will be subject to Division 66. This means you can claim GST back on the purchase, but there’s no GST component in the sale price. ​

There are two different approaches to applying Division 66, which differ based on the price of the second hand goods and whether you plan to re-sell them as individual items or as parts.​

The two approaches are:​

Generally speaking, if you purchase an item for under $300 and you intend to re-sell, you can choose to claim the GST back immediately. If you purchase an item over $300, however, you need to sell the item again in order to claim the GST credit.​

It is important to note there are exceptions to this rule. Your accountant can guide you on what you can (and can’t) claim, and ensure your BAS is filled out correctly.​

When you purchase second hand goods from an entity who is registered for GST, and you have a valid tax invoice, you can claim back the GST on your BAS.​

To get the GST portion of your purchase, take the total price paid and divide by 11. You can also pay through your business bank account and treat it as a business purchase and a GST purchase in your software.​

For example, if you purchase a second hand printer for $110, the GST portion would be $110/11= $10.​

When purchasing from someone who isn’t GST registered, you won’t receive a GST invoice and there will be no GST charge for the items you buy. In order to make GST claims, you need to have paid for the goods and keep records as required by the ATO.​

You need to keep appropriate records In order to claim a GST credit. If you purchase from a person who’s not registered for GST, a tax invoice is not required, however you still need to document the following information:​

If you purchase second hand goods from a GST-registered entity, you'll need to keep a valid invoice.​

GST stands for Goods and Service Tax. In Australia, GST is 10% on top of any goods or services you sell. If you’re GST registered, you can claim back the GST portion on the purchases of goods or services you use for taxable activities.​​

If your business's annual turnover is above $75,000 you need to register for GST. Once you're registered, you need to include GST on top of the sales price of your goods/services (unless it qualifies as a GST-free or exempt item). You'll also need to issue GST invoices that meet the ATO's requirements.​

In Australia, GST is filed as part of BAS returns. These are generally filed quarterly but can be monthly or annually in certain situations. View the reporting frequency info on the ATO’s website for more information.​

Read more: view our tax dates page for all the common filing and payment deadlines for business owners in Australia.​

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