Financial services - questions and answers

1.6. What constitutes (a) an invoice and (b) a tax invoice for a hire purchase agreement?

For source of ATO view, refer to paragraphs 8-10 and 13 of GSTR 2000/17 - Goods and services tax: tax invoices.

Where a hire purchase agreement notifies the recipient of an obligation to make a payment, this document will be treated as an invoice. This is in accordance with the definition of an invoice mentioned in section 195-1 of the GST Act.

A document, including a hire purchase agreement, will be a tax invoice if it meets the requirements of subsection 29-70(1), including containing information about the taxable supply and other matters.

Further guidelines on tax invoice requirements may be found in Goods and Services Tax Ruling GSTR 2000/17.

Sections within Hire purchase agreements and chattel mortgage

• 1.1. What is the meaning of hire purchase for GST purposes?
• 1.2. Which component of a hire purchase agreement entered into before 1 July 2012 is a financial supply and which component is subject to GST?
• 1.3. When will entitlement to an input tax credit arise for the recipient of goods in a hire purchase agreement?
• 1.4. When will liability for GST arise for the financier of goods in a hire purchase agreement?
• 1.5. Are there special rules for the phasing in of input tax credits on motor vehicles?
• 1.6. What constitutes (a) an invoice and (b) a tax invoice for a hire purchase agreement?
• 1.7. What are the GST implications for hire purchase agreements entered into before 1 July 2000?
• 1.8. How do I know which part of my hire purchase agreement is subject to GST?
• 1.9. What are the GST implications when the recipient under a hire purchase agreement obtains title to the property, either by making the final payment under the agreement or by making an early pay out of the agreement?
• 1.10. What are the GST implications if the recipient defaults in making payment under the agreement and the financier repossesses the goods?
• 1.11. What are the GST implications if the repossessed goods are subsequently sold to a third party, and the agreement provides for any excess to be refunded to the recipient or any shortfall to be recouped from the recipient?
• 1.12. Will Division 105 of the GST Act apply if the financier sells the repossessed goods to a third party in satisfaction of a debt owed to the financier by the recipient?
• 1.13. What are the GST implications if a hire purchase agreement is restructured during the currency of the agreement, where the outstanding balance is refinanced as a new hire purchase agreement?
• 1.14. What are the GST implications if a hire purchase agreement is terminated during its currency and the financier subsequently grants a loan to enable the recipient to purchase the goods with title passing to the recipient?
• 1.15. If the recipient accounts for GST on a cash basis, how does the recipient calculate entitlement to input tax credits where the agreement shows the principal and interest components separately, but the instalments do not?
• 1.16. Can a recipient who accounts for GST on a cash basis pay the GST liability up front in a tax period and claim that whole payment as input tax credit in the same tax period?
• 1.17 If a recipient accounts for GST on a non-cash basis, how does the recipient calculate entitlement to input tax credits where the hire purchase agreement is for the acquisition of a car that is subject to the car input tax credit limit under section 69-10 of the GST Act?
• 1.18 If a recipient accounts for GST on a cash basis, how does the recipient calculate entitlement to input tax credits where the hire purchase agreement is for the acquisition of a car that is subject to the car input tax credit limit under section 69-10 of the GST Act?
• 1.19. What is a chattel mortgage?
• 1.20. How does a chattel mortgage arrangement differ from a hire purchase agreement?
• 1.21. When will an entitlement to an input tax credit arise for a purchaser in relation to the acquisition of a chattel under a chattel mortgage?