GST on second hand goods

GST stands for Goods and Service Tax. In New Zealand, GST is 15% added on top of the goods and/or services you sell. If you’re GST-registered, you can claim back the GST portion on the purchases of goods or services you use for taxable activities. ​

The GST registration threshold is $60,000 in New Zealand. This means if your business's annual turnover exceeds $60,000, you need to register for GST. If your business's annual turnover is below this threshold, then GST registration is voluntary. This blog on how and when to register for GST explains this GST registration in more detail.​

Once you become GST-registered, you must include 15% GST on top of the sales price of your goods and/or service. You’ll also need to issue GST invoices that meet IRD’s requirements. ​

Here are some important GST formulae you should know:​

Read more: 10 common GST mistakes small business owners should avoid​

Here is how you can calculate the GST amount you can claim back. You take the total price paid (and note here, you have to have actually 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 business purchase 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​

You won’t get a GST invoice when purchasing from someone who is not GST-registered and there will be no GST charged for the second-hand goods you buy. In order to make GST claims, you still need to keep the records required by IRD. ​

The only thing to note is that even if you don’t have a GST invoice, you still need to record the following:​​

The only exception to this general rule is if you’re buying from someone associated to you. So 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. 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. ​

2. 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 exempted from GST (no GST is charged). Find more on how GST works for special transactions in this blog. ​

3. When is my GST return due?​

In New Zealand, the GST filing frequency is monthly, bi-monthly, and six-monthly. According to your GST filing frequency, use our tax deadline calendar to help you figure out when your GST return is due. ​

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