My son and I purchased a second hand caravan to make and serve coffee from when we started our business. The purchase price did not include gst and we were not registered for gst as we did not expect our turnover to be over $75000. When our turnover increased we registered for GST. Now we have stopped trading and are closing the business. We have sold the caravan but as we were registered for gst I think we have to pay some of the sale money as gst when we do our final BAS. But there is a secondhand goods rule that says that you can claim input tax credits even if you did not pay GST when you purchased the second hand item and you claim when you sell the item. Would we be able to apply this in our case? Or should I have cancelled the gst earlier (my understanding was until I did the final BAS and tax return I shouldn't). I did have an accountant but they left me in the lurch.
38 views
4 replies
All replies
Best to see a tax agent or ask ATO's technical advice
But there is a secondhand goods rule that says that you can claim input tax credits even if you did not pay GST when you purchased the second hand item and you claim when you sell the item.
- But GST credits are claimed at time of purchase? If you weren't registered for GST at the time of purchase then can't claim GST credit?
- Also I think it's talking about goods as in like inventory, there's examples
Or should I have cancelled the gst earlier (my understanding was until I did the final BAS and tax return I shouldn't
- I don't think there's much of a difference for you unless you didn't charge GST on top of the amount you wanted to sell the caravan for
- E.g. Simplistically, if target is to make 10k from selling the caravan, then if registered for GST sell the caravan for 11k because 1k would be paid to ATO for GST
But there is a secondhand goods rule that says that you can claim input tax credits even if you did not pay GST when you purchased the second hand item and you claim when you sell the item.
This only applies to dealers in second hand goods, eg. scrap metal merchants, used car traders.
I’m not an accountant, but I’ve dealt with a similar GST situation before, so hopefully this helps clarify things a bit.
Once you became GST-registered, any taxable sale of business assets (including the caravan) generally becomes subject to GST — even if you originally bought the item second-hand and no GST was included in the purchase price. So yes, in most cases you would need to report 1/11th of the sale price as GST on your final BAS.
The second-hand goods rules can be confusing. My understanding is that those rules mainly allow GST-registered businesses to claim input tax credits when purchasing eligible second-hand goods for resale, even when the seller didn’t charge GST. They usually apply to businesses trading in second-hand goods (like dealers or resellers), not to business assets used in operations (like a coffee caravan you operated from). Because the caravan was used as a business asset rather than inventory for resale, that rule likely wouldn’t apply here.
Regarding cancelling GST registration — you were actually right to keep the registration active until trading stopped and all business assets were sold. The Australian Taxation Office generally expects businesses to remain registered until they’ve completed final sales, lodged the last BAS, and finalised obligations. Cancelling earlier can sometimes complicate things.
What I would suggest now:
- Include the caravan sale in your final BAS while still registered for GST.
- Declare GST on the sale if it was sold as part of closing the business.
- Then cancel GST registration after lodging the final BAS.
Since your accountant disappeared (which is incredibly frustrating), it might be worth calling the ATO small business helpline directly — they’re usually quite helpful with closure questions and can confirm your exact situation without charging you.
You’re definitely not alone closing a business has a lot of moving parts, and GST on asset sales catches many people off guard.
Hi @newbeginning,
To clarify the main points:
- Because you were registered for GST at the time you sold the caravan, the sale is generally a taxable supply, and GST is reported in your final BAS.
- The second‑hand goods rules don’t apply here. They only apply in limited situations where goods are acquired for resale as part of an enterprise. They don’t apply to business assets (like a caravan used to operate the business), and they don’t allow a GST credit to be claimed at the time of sale.
- Not being registered for GST when you originally bought the caravan means there’s no entitlement to GST credits for the purchase.
- It’s appropriate to cancel GST registration after you’ve stopped trading, sold business assets, and lodged your final BAS.
If you want confirmation for your specific circumstances before lodging, a registered tax agent can review the dates and details for you.
Featured articles
15 Apr 2026 · 4 min read time
22 Apr 2024 · 6 min read time
15 Apr 2026 · 4 min read time