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TAX •  12 JULY 2023 • 3 MIN READ

GST on second hand goods

a picture of an old second hand store

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 below (we’ll cover them in more detail later):

  • Supplies from a non-registered entity
  • Supplies from a non-registered entity subject to Division 66
  • Taxable supplies

What is GST?

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.

How does GST work?

In Australia, the GST registration threshold is $75,000. In other words, if your business's annual turnover exceeds $75,000, you need to register for GST. If your business's annual turnover is below this threshold, registering for GST becomes voluntary. You can read more about this on our blog: how and when to register for GST.

Once you are GST-registered you must include 10% GST on top of the sales price of your goods or service. You’ll also need to issue GST invoices that meet the ATO’s requirements. Read more on what to include in your tax invoice here.

Here are some important GST formulae you should know:

  • If you’re adding GST: the sales price*1.1
  • If you’re excluding GST: the sales price/1.1

GST on second hand goods

Supplies from a non-registered entity

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.

Supplies from a non-registered entity subject to Division 66

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 (however, 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:

  1. Direct Approach
  2. Global Accounting method

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 Beany accountant can guide you on what you can (and can’t) claim, and ensure your BAS is filled out correctly.

Taxable supplies

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.

How much can I claim back?

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 good(s) and keep records 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:

  • name and address of the supplier
  • date of the purchase
  • description of the goods 
  • quantity of goods
  • price paid

You’ll need to keep a valid invoice If you purchase second hand goods from a GST-registered entity.

Kate, Australian problem solver

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John Curtis

John Curtis

Chief Technical Officer


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