• GST consequences

    If you are a manufacturer

    As a third party MVIP is consideration for the sale of a motor vehicle, and the sale is made to the customer and not to you, you are not entitled to a GST credit.

    For third party MVIPs made on or after 1 July 2010, you may be able to make a decreasing adjustment.

    If you are a dealer

    If you are a dealer, you report GST on the total consideration received for the sale, including the consideration received from the customer and any third party MVIPs.

    When to report the GST

    Usually, you report the total GST on the sale of a motor vehicle in the tax period that is the earlier of when you:

    • receive any of the consideration (including a third party MVIP)
    • issue an invoice for any of the consideration (including a third party MVIP).

    When you report GST will change if you:

    • receive a third party MVIP and then sell the vehicle in a later period
    • sell the vehicle then receive a third party MVIP in a later period
    • receive a third party MVIP but do not make a sale.

    From 1 May 2014, you can issue a customer either a:

    • tax invoice
    • document that meets all the tax invoice requirements. However, it does not need to include information about the third party MVIP and the GST for that MVIP.

    See also:

    Receiving a MVIP and then selling the vehicle in a later period

    If you receive a third party MVIP and then make a sale in a later tax period, you can delay reporting all of the GST payable (and any LCT applicable) until you know the total amount of the consideration.

    Selling the vehicle then receiving a MVIP in a later period

    If you sell a motor vehicle, and then receive a third party MVIP in a later tax period and you were:

    • aware when you made the sale that you would receive a third party MVIP of a known amount, you report GST for the total consideration (including consideration from the customer and the third party MVIP) in the tax period the earlier of when you
      • receive any payment from the customer
      • issue an invoice to the customer.
       
    • aware when you made the sale that you would receive a third party MVIP but you did not know the amount of the MVIP when you made the sale, you report the GST on the
      • amount charged to the customer in the tax period the earlier of when you receive the payment from the customer or issue an invoice to the customer
      • third party MVIP in the tax period when you received it.
       
    • unaware of the third party MVIP, you report the GST on the
      • amount charged to the customer in the tax period the earlier of when you receive the payment from the customer or when you issue an invoice to the customer.
      • third party MVIP in the tax period you received it, which will result in additional GST by making an increasing adjustment in your activity statement.
       
    Receiving a MVIP but not making a sale

    If you receive a third party MVIP but you do not end up making a sale of the motor vehicle to a customer, no GST liability arises as there is no supply for which the payment is consideration.

    If you are a customer

    If you buy a motor vehicle and a manufacturer provides the dealer with a third party MVIP for the sale, the dealer must pay GST and if relevant, LCT, in respect of the third party MVIP.

    You are only entitled to claim a GST credit in respect of the payment you made (even though this may not have been the full price received by the dealer from you and the manufacturer).

    Even if you use a motor vehicle solely in carrying on your business and you are registered for GST, you provide (or are liable to provide) only part of the consideration for the purchase (as the rest is paid by the manufacturer as a third party MVIP).

    To claim your GST credits you must hold either a:

    • tax invoice
    • document that meets all the tax invoice requirements – the document does not need to include information on the third party MVIP and the GST for the MVIP (from 1 May 2014).

    Next steps:

      Last modified: 06 Jun 2016QC 49280