GST on second-hand goods

Let’s say, for example, you’re running a landscaping business and want to purchase a new piece of equipment. You may consider buying them second-hand because they’re generally cheaper than new ones. However, the question arises 'how do I deal with the GST on second-hand goods?' ​

We quite often get asked if you can claim back GST on second-hand goods for your business from someone that isn’t GST registered. For example, you might buy a piece of business equipment for your cleaning business on TradeMe and the seller isn’t going to provide a nice GST invoice for your records.​ Or you bought a second-hand printer for your business. ​

Well, the good news is you can claim back the GST amount on your purchase even if the seller is not GST-registered.​

You take the total price paid (you have to actually have paid for it before you claim) and divide by 23 and multiply by 3 to get the GST portion.  Alternatively, just pay through your business bank account and treat as a GST purchase in your software and that should do the trick.​​

For example, Anna bought a second-hand printer for $100. The GST portion on this second-hand printer is $100*3/23= $13.04.​

If you're purchasing from someone who is not GST-registered you probably won't get an invoice. However, in order to claim the GST on your purchase you still need to keep records as required by the IRD.​

Try ouf GST calculator: for an easy way to calculate GST-inclusive or exclusive prices or even the GST component, bookmark our GST calculator.​

If you don’t have a GST invoice, you still need to record the following information about the item you've purchased:​​

The only exception to this general rule is if you’re buying from someone associated to you. For example, if you buy a car from your brother and he’s not GST registered, then you can only claim the lowest of:​

This is to prevent any tax shenanigans between mates or family!​

1. What is GST?​

Goods and Services Tax (GST) is 15% added on top of the goods/services you buy and sell. If you're GST registered, you can claim back the GST portion on the purchases of goods or services you use for taxable business activities. ​

2. Where can I find my GST number?​

For sole traders, your GST number is the same as your IRD number. For companies and partnerships, the GST number is the same as your partnership or company IRD number. ​

3. What are zero-rated supplies?​

Simply put, a GST rate of 0% is applied for zero-rated supplies. Zero-rated supplies are not the same as supplies that are exempt from GST (no GST is charged). Find out more on how GST works for special transactions in this article. ​

4. When is my GST return due?​

In New Zealand, the GST filing frequency is monthly, bi-monthly, or six-monthly. The frequency will typically depend on how large your business is. For example, businesses with sales under $500,000 during any 12-month period can file six-monthly GST returns. View the table on the IRD website for info on eligibility for different filing frequencies.​

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