| GST and the Disposal of Motor Vehicles |
| Sale of things by a GST registered business will normally be taxable supplies. Motor vehicles are ?things?. |
Motor vehicle trade-in
If a taxpayer is registered for GST, a trade in of a business vehicle is subject to GST. A tax invoice must be provided to the car dealer showing the value of the trade-in plus the GST. This applies regardless of when the vehicle was acquired (ie even if before commencement of GST).
Sale or transfer of ownership to associates
This must be treated as though it was a sale for market value. Once again a tax invoice must be provided to the purchaser.
Cancellation of GST registration
When a business enterprise cancels its GST registration, it may still hold motor vehicles on which it has, or is entitled to claim input tax credits. GST is payable - as an increasing adjustment, calculated as the business use percentage of the market value.
Sale of car used partly for private purposes
A reduction in the GST payable on disposal may apply if the vehicle was purchased after 24th May 2001.
Mistakes are very easy in this area, so check and double check your actions and calculations and ask for assistance.
25th-November-2003 |
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