Hi all,
I run an online trading card reselling business and regularly purchase inventory from private individuals who are not GST-registered. I understand Division 66 allows a deemed input tax credit in these cases and GST is calculated on the margin when the goods are resold.
I just want to confirm my understanding of the mechanics:
If I purchase an item for $70 from a private seller, I would be entitled to a deemed input tax credit of $70/11 = $6.36.
If I then sell the item for $100, the margin is $30, and GST payable would be $30/11 = $2.73.
This results in a net GST credit position of $3.63.
My question is:
- Is this outcome correct under Division 66?
- If so, is it expected that businesses operating on typical resale margins (e.g. buying at ~70% of resale value) may often be in a net GST refund position?
I assume there are practical limitations (e.g. the $300 per item rule, record-keeping, or anti-avoidance considerations), but I’d appreciate confirmation on whether the above treatment is technically correct.
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