Hi,
I am in the process of setting up a business that involves buying second-hand vehicles - mostly from private sellers - and reselling them to private buyers. I hold a motor dealer licence and operate as a sole trader registered for GST.
I would like some clarification on how GST should be calculated on these vehicle sales.
Thanks in advance for your help.
ATO guidelines on this is outlined in link
GST and second-hand goods | Australian Taxation Office
Hi,
Thanks for your answer.
If I understand well:
As the purchase was from a private seller, no GST was charged at the time of purchase. However, under the GST rules for second-hand goods, I am entitled to a GST credit.
The GST credit I can claim is 1/11 of the purchase price ($272.73), and the GST included in the selling price is 1/11 of $5,000 ($454.55).
Therefore, the net GST payable to the ATO is the difference between the GST on the sale and the GST credit on the purchase, which is $181.82.
Is that correct?
Thanks again
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