GST claim on private vehicle purhase.
Submitted: Sunday, Jul 08, 2007 at 18:46
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dave_c
gday all,
i was told today that i can not claim gst when buying a used vehicle. being that the vehicle will be bought through my company, i thought this odd. If this is true, why would anyone who is gst registered, bother buying anything other than a dealer used vehicle. Is there anyone clued up in this area who can clarify this please.
cheers dave
Reply By: fisho64 - Sunday, Jul 08, 2007 at 19:17
Sunday, Jul 08, 2007 at 19:17
your post is a little unclear? Are you talking about buying a private used vehicle? If so then there is no GST charged by the seller as he is not GST registered. Therefore there is no GST for you to claim on? So it comes back to the same thing as buying as a private person. Yopu can buy private , or a dealer used vehicle at a premium with a warranty, plus GST that you can claim back if you are registered to claim it.
Correct me if I have misunderstood your post, but it isnt quite clear what you are asking?
AnswerID:
251371
Follow Up By: dave_c - Sunday, Jul 08, 2007 at 19:45
Sunday, Jul 08, 2007 at 19:45
gday fisho64,
yes, im interested in a car which is privately owned. im trying to point out that if i cant claim gst, am i better to buy from dealer. if the two cars have the same bottom line i save 10% buying the dealer car. does this mean private car sellers are over pricing??. What if we are both registered can i claim?
hope this is clearer.
cheers dave
FollowupID:
512505
Follow Up By: Mick - Sunday, Jul 08, 2007 at 20:24
Sunday, Jul 08, 2007 at 20:24
If both seller and buyer are registered for GSt and the seller provides a Tax Invoice with his ABN, then you can include that GST in your next Business Activity Statement as GST paid. You then calculate how much GST your business has collected and how much it has paid and that's what determines whether you get some back :)) or pay some more :((
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512512
Follow Up By: fisho64 - Sunday, Jul 08, 2007 at 23:38
Sunday, Jul 08, 2007 at 23:38
spot on Mick, you beat me and explained better!
But Dave, if a private seller and a dealer have 2 (hypothetically) identical vehicles for sale at the same price (forget the GST for now) then yes it is too dear as dealer usually must offer warranty.
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512537
Reply By: Motherhen - Sunday, Jul 08, 2007 at 19:20
Sunday, Jul 08, 2007 at 19:20
Dave
Sounds like you are like us, buying a vehicle principally for business use by private sale from a private individual, therefore there is no GST to be claimed back. Is this what you mean?
The value paid was similar to that with GST in a dealer yard, but the bottom line was the vehicle we got was the one we wanted.
AnswerID:
251372
Follow Up By: dave_c - Sunday, Jul 08, 2007 at 19:56
Sunday, Jul 08, 2007 at 19:56
gday motherhen
Yep, thats exactly whats happening. normally selling one car and buying another offsets the gst but if i buy private this wont happen. But then accountants can always work something out. I hope anyway. lol.
cheers dave
FollowupID:
512506
Follow Up By: Motherhen - Sunday, Jul 08, 2007 at 21:20
Sunday, Jul 08, 2007 at 21:20
Dave - the private sale price is usually below that in the dealer's yard, which helps compensate for the loss of GST claim. As SARocks said, you need to remit the GST on a vehicle your business sells if you are a GST registered business. In our recent purchase, not only did buying the vehicle we found cost us WA's extreme stamp duty, but there was no GST. However we believe we got a good vehicle, which should outweigh the higher start up costs over the years to come.
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Reply By: V8Diesel - Sunday, Jul 08, 2007 at 20:00
Sunday, Jul 08, 2007 at 20:00
I got badly burnt by this last year. Talk carefully to your accountant.
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251388
Reply By: Mick - Sunday, Jul 08, 2007 at 20:19
Sunday, Jul 08, 2007 at 20:19
If you are buying it privately you won't be paying GST so you won't get a Tax Invoice to claim it back when you do your BAS. If you buy it through a dealer I would be claiming the GST paid in my BAS. After all you only have to provide the total GST paid so who will know anyhow? :)
AnswerID:
251396
Follow Up By: Mick - Sunday, Jul 08, 2007 at 20:26
Sunday, Jul 08, 2007 at 20:26
Unless you get audited in which case you have to have TAx Invoices to support your GST paid figures.
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Follow Up By: Motherhen - Sunday, Jul 08, 2007 at 21:15
Sunday, Jul 08, 2007 at 21:15
If you buy privately, you need to get the vendor to provide you with an invoice showing the amount of purchase, and a declaration that the sale is of a private nature (check ATO website for appropriate wording).
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Follow Up By: fisho64 - Monday, Jul 09, 2007 at 02:07
Monday, Jul 09, 2007 at 02:07
Motherhen, I dont know that that is quite correct? If you buy privately why do you have a need to prove anything regarding GST? There is nothing to claim or offset? If the seller is actually a business but selling it privately then it has nothing at all to do with the purchaser? It is of no consequence to the purchaser if the vendor turns out to be GST registered and decides to keep the GST portion anymore than any other purchaser needing to ensure a business remits his GST?
thats my understanding anyway but I am a little rusty as I havent needed to put in a BAS for a couple of years.
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Follow Up By: Motherhen - Monday, Jul 09, 2007 at 21:57
Monday, Jul 09, 2007 at 21:57
Hi fish064
If buying privately for a business, as per Dave's original question, although GST is not in the picture other tax implications need to be considered.
For the business to purchase the vehicle, it would need the appropriate document to bring it in as a purchase for tax purposes. Businesses must withhold 46.5% when paying bills to someone not quoting a valid ABN on their invoice, unless the vendor provides a 'private nature', 'not-for-profit' or 'hobby' declaration. With the correctly worded document, the business can use this to bring the cost of the vehicle in for tax purposes. Small business buying vehicles privately is not unusual.
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Reply By: SARocks - Sunday, Jul 08, 2007 at 20:33
Sunday, Jul 08, 2007 at 20:33
Dont forget if you sell your vehicle privately you claimed the GST on previously you will have to pay the GST on the sale.
If you buy a vehicle privately and the person is not registered for GST you cannot claim any GST back as there was no GST paid.
AnswerID:
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Follow Up By: AndrewX - Monday, Jul 09, 2007 at 09:14
Monday, Jul 09, 2007 at 09:14
I don't think that your first sentence is correct SA. If it's sold privately it has nothing to do with the business and therefore doesn't attract GST.
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Reply By: Rob J - Monday, Jul 09, 2007 at 10:54
Monday, Jul 09, 2007 at 10:54
Don't do anything until you speak to your accountant and understand what he tells you. I had an incident a few years ago that took12mths to settle and that was from a dealer sale.
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Reply By: Mikee5 (QLD) - Monday, Jul 09, 2007 at 12:50
Monday, Jul 09, 2007 at 12:50
SARocks is right about selling your current vehicle. If you claimed back the GST when you bought it, you must include GST (and pay it to the tax office) when you sell it.
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Reply By: Gerhardp1 - Monday, Jul 09, 2007 at 16:03
Monday, Jul 09, 2007 at 16:03
This is an extract from the ATO web site
Purchasing a second-hand motor vehicle
If you purchase a second-hand motor vehicle from someone who is not registered for GST and you are purchasing the vehicle in order to sell or exchange it, you may be entitled to claim a GST credit. If the cost of the vehicle is more than $300, you can claim the GST credit when you sell the vehicle, provided the sale of the vehicle by you is a taxable sale. The credit is the lesser of:
* one-eleventh of the amount you paid for the vehicle, or
* the amount of GST payable when the vehicle is sold.
If you purchase a second-hand vehicle from someone who is not registered for GST and you don’t plan to sell or exchange the vehicle, you cannot claim a GST credit.
Site Link
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Follow Up By: Mikee5 (QLD) - Tuesday, Jul 10, 2007 at 13:05
Tuesday, Jul 10, 2007 at 13:05
Just so there is no confusion, the terms 'in order to sell or exchange it' refer to 'trading stock' ie buying, selling, trading cars, as opposed to 'capital assets' which you hold and depreciate. Obviously in the long term you intend to sell or trade the vehicle, that is outside the meaning here. Division 66 of the GST Act refers, also if you claim the Div 66 credit on the purchase, you can only do at the time you sell and only if you sell for more than you pay, ie you pay 1/11th of the profit on the deal (unless the purchase price is under $300 (Div 66A) or you apply global pooling (Div 66B) to your stock). Same rules apply to any second hand goods, eg pawn brokers, used furniture, scrap metal etc. Cheers.
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Reply By: Col88 - Monday, Jul 09, 2007 at 17:16
Monday, Jul 09, 2007 at 17:16
SA is spot on. If you gain from the disposal of your current vehicle, it is the property of the business and is treated like any other sale of goods or
services. You will have to pay GST. Even if you trade it in, so keep that in mind as that figure includes GST which you will pay to ATO.
It would be as obvious as hell, but could you buy the car from the business for $1, pay the GST and trade it as private?
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Follow Up By: Mikee5 (QLD) - Monday, Jul 09, 2007 at 19:00
Monday, Jul 09, 2007 at 19:00
Col, sorry but that is called a non-arms-length transaction and you must give the ATO the GST on the value not the cost. Nice try but they already thought of that one.
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Follow Up By: Col88 - Monday, Jul 09, 2007 at 21:49
Monday, Jul 09, 2007 at 21:49
Maybe if I sold it to my neighbour :-))
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Reply By: dave_c - Monday, Jul 09, 2007 at 19:20
Monday, Jul 09, 2007 at 19:20
gday all,
once again you blokes have been brilliant. you have all helped to make clear this matter. thanks
dave
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