Tax Tips: GST for secondhand goods if purchased from an unregistered seller The IRD defines secondhand goods as goods previously used and paid for by someone else. It does not include:
Primary produce (unless previous used)
Goods supplied under a lease or rental agreement
Remember also that according to the IRD’s recent clarification, land is also classified as second-hand goods! Generally, if you’re GST registered and purchase from an unregistered seller, you can claim a credit for GST purchases. Circumstances where this rule applies include: a car dealer purchasing a car from an individual, a property developer purchasing property or land. The purchase should be recorded in Boxes 11 and 12 where you normally record your purchase and expenses on the GST return form. In order to qualify for this deduction, you must make a payment before the claim regardless of the accounting basis you use. As recommended by the IRD, in instances where you’re unable to obtain an invoice from the seller; it is of great significance that you keep certain information of the transaction, particularly when the purchase is over $50:
The name and address of the supplier
The date of the transaction
Description and quantity of the goods purchased
Happy thrift shopping and if you need advice from a down to earth Chartered Accountant in Hamilton, come in and see Brett at the office.