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  • 7.4.e. In what circumstances is a dealer entitled to claim an input tax credit for motor vehicles acquired/traded in from charities, gift deductible entities or government schools?

    Non-interpretative - straight application of the law.

    Generally, these entities will probably be GST registered entities (or required to be registered). If they make a supply of a motor vehicle to a dealer it will be a taxable supply or a GST-free supply if section 38-250 of the GST Act applies (see Note below). A dealer's entitlement to an input tax credit is outlined below:

    1. If the taxable supply is a creditable acquisition by a dealer, the dealer is entitled to claim an input tax credit, provided they obtain a tax invoice from the entity supplying the vehicle.
    2. If the supply is a GST-free non-commercial supply the dealer is not entitled to an input tax credit as the consideration for the vehicle would not include an amount for GST.
    3. For acquisitions of motor vehicles from unregistered entities see questions 7.4.b.

    Note: The GST law provides that the commercial activities of registered charities, gift-deductible entities or government schools will be taxable supplies (or input taxed). However, under section 38-250 of the GST Act, the non-commercial supplies of these entities will be GST-free. A non-commercial supply by these entities is where the consideration received is less than 50% of the GST-inclusive market value of the thing or less than 75% of the consideration the supplier provided when acquiring the thing.

      Last modified: 07 Jun 2012QC 16411