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:
- 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.
- 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.
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.
- For acquisitions of motor vehicles from unregistered entities see questions 7.4.b.