Goods and Services Tax Determination GSTD 2000/2




Examples: Example 1: A machinery and spare parts dealer acquires a second-hand tractor for $10,000 on 12 April 2000. The only improvements made to the tractor prior to 1 July 2000 are the addition of 2 tyres. The tyres had been held in stock and cost $1,000. At the start of 1 July 2000 the second-hand tractor is held for the purpose of sale, and is sold in August 2000 for $18,000 GST inclusive. The amount of input tax credit is: | Example 2: A motor vehicle dealer acquires a second-hand vehicle for $15,000 on 1 March 2000. A reconditioned gearbox is installed by a gearbox specialist at a invoiced cost of $1,500 on 25 May 2000. At the start of 1 July 2000 the second-hand vehicle is held for the purpose of sale. The second-hand vehicle is sold in September 2000 for $20,000 GST inclusive. The amount of the input tax credit is: | Example 3: Same facts as Example 2. The second-hand vehicle is sold in September 2000 for $15,400 GST inclusive (GST $1,400) The amount of the input tax credit is $1,400, being the lesser of: | Example 4: A laser printer cartridge recycler acquires 100 used cartridges on 19 April 2000 for $5 each ($500 total). The cartridges are reconditioned with the installation of new parts and insertion of new toner ink prior to 1 July 2000 at an invoiced cost of $6 each ($600 total). The reconditioned cartridges are held for sale at the start of 1 July 2000, and are sold during July 2000 at $22 each GST inclusive. The amount of the input tax credit is: Commissioner of Taxation 21 June 2000 Not previously issued in draft form



This document was published prior to 1 July 2010 and was a public ruling for the purposes of former section 37 of the Taxation Administration Act 1953 and former section 105-60 of Schedule 1 to the Taxation Administration Act 1953. | From 1 July 2010, this document is taken to be a public ruling under Division 358 of Schedule 1 to the Taxation Administration Act 1953. | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | [Note: This is a consolidated version of this document. Refer to the Legal Database (http://law.ato.gov.au) to check its currency and to view the details of all changes.] | This Determination applies [to tax periods commencing] both before and after its date of issue. However, this Determination will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). | 1. Yes, you are allowed to claim input tax credits for second-hand goods you hold at the start of 1 July 2000 for the purposes of sale or exchange (but not manufacture) in the ordinary course of business, subject to certain requirements explained in paragraph 3. | 2. From the start of 1 July 2000 Subdivision 66-A of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) allows you to claim input tax credits for second-hand goods that are acquired from 1 July 2000 for the purposes of sale or exchange (but not manufacture) in the ordinary course of business, subject to the exclusions outlined in subsection 66-5(2). | 3. Section 18 of the A New Tax System (Goods and Services Tax Transition) Act 1999 (Transition Act) extends the operation of Subdivision 66-A to allow an input tax credit for second-hand goods you acquire before 1 July 2000 that you hold on 1 July 2000 for the purposes of sale or exchange (but not manufacture) in the ordinary course of business which would otherwise be excluded by subsection 66-5(2) of the GST Act. However, this section will not apply to second-hand goods which you have held for any other purpose, or in respect of which you are entitled to a special credit under section 16 of the Transition Act. | 4. The term second-hand goods means those goods that are previously used or not new (see Goods and Services Tax Ruling GSTR 2000/8 at paragraphs 57-69). Where new goods are incorporated into second-hand goods they are no longer identifiable in themselves. They form part of, or are subsumed into, the second-hand goods. | 5. The input tax credit available to you under Subdivision 66-A will include goods (either new or second-hand) you have incorporated into the second-hand goods (other than imported second-hand goods where you are entitled to the special credit under section 16 of the Transition Act) where: | 6. The consideration provided, or required to be provided, for the acquisition of the second-hand goods and the goods (either new or second-hand) incorporated into the second-hand goods will be the invoiced cost of those goods to you. Consideration for the goods (either new or second-hand) incorporated will include any associated related external costs for the acquisition of those goods (for example, the invoiced labour cost of installation of a gearbox into a second-hand vehicle). | 7. The consideration for the second-hand goods held at the start of 1 July 2000 will be the sum of the consideration for the acquisition of the second-hand goods and the consideration for the goods (either new or second-hand) incorporated. | 8. Where the requirements of Subdivision 66-A are satisfied the input tax credit is calculated as follows: | Attribution of the input tax credit: 9. If you are entitled to an input tax credit for an acquisition of second-hand goods because of section 18 of the Transition Act, the input tax credit will be available on the combined consideration for the acquisition of both the second-hand goods and the goods (either new or second-hand) that have been incorporated prior to 1 July 2000 into the second-hand goods. | Combined consideration for acquisitions was $300 or less: 10. Where the combined consideration for the acquisitions was $300 or less the input tax credit is treated as though it were an input tax credit attributable to any one tax period of your choice. | Combined consideration is more than $300 and you account on a cash basis: 11. Where the combined consideration for the acquisitions was more than $300 and you account on a cash basis, then the input tax credit is attributable to: | Combined consideration is more than $300 and you do not account on a cash basis: 12. Where the combined consideration for the acquisitions was more than $300 and you do not account on a cash basis, then the input tax credit is attributable to: | 1/11th x ($10,000 + $1,000) | 1/11th x ($15,000 + $1,500)


Related rulings: TR 2006/10 GSTR 2000/8
Legislative references: ANTS(GSTT)A99 16 ANTS(GSTT)A99 18 ANTS(GST)A99 66-5(2) ANTS(GST)A99 Subdiv.66-A TAA 1953 Sch 1 Div 358
Subject references: goods held for sale or exchange goods imported goods on hand input tax credit sale or exchange second-hand goods special credit