When second-hand goods are GST-free
Sales of second-hand goods by endorsed charities, certain gift-deductible entities or government schools are GST-free if the goods were either:
- gifted to you
- a GST-free sale of second-hand goods to you by another endorsed charity, gift-deductible entity or government school.
View our definitions of entity types that are eligible for GST concessions if you're unsure if you're one of the entity types listed above.
A sale is not GST-free if you change or alter the original character of the goods. The original character is not changed if the goods are cleaned or repaired before being sold.
If you make GST-free sales, you:
- don't need to pay GST on them
- can claim GST credits for the GST included in the price of purchases related to these sales
- must include these sales when working out your GST turnover.
Example: sale of second-hand clothing
RePurposeful is an endorsed charity that is registered for GST. RePurposeful receives donations of damaged second-hand clothing.
If RePurposeful cleans or repairs the damaged clothing before selling it, this does not change the original character of the goods. The sale of the cleaned and repaired clothing by RePurposeful is GST-free.
If RePurposeful cuts up the clothing and sells it as rags, the goods no longer have the same character as the goods that were donated. RePurposeful has manufactured the clothing into a new product. The supply of the rags is not a sale of GST-free second-hand goods.
RePurposeful's sale will be taxable unless another NFP concession applies. For example, the sale may be GST-free if sold for nominal consideration.
End of exampleWhat are second-hand goods
Second-hand goods are goods that have previously been used and are generally not new. Goods may be second-hand goods if they are new and have been bought by an individual or business for the purpose of donating them.
Second-hand goods don't include:
- animals or plants
- goods that consist of gold, silver, platinum or any other substance, which would be precious metal if it were of the required fineness
- goods donated by a business where the goods were the trading stock of that business.
Example: sale of trading stock donated by a business
Learning Independence is an endorsed charity that is registered for GST. It sells goods donated by individuals and local businesses.
Gifts and Novelties Pty Ltd donates floor-damaged novelty cups to Learning Independence to sell. The novelty cups have not been used and were held by Gifts and Novelties Pty Ltd as trading stock for sale.
The sale of the donated floor-damaged goods by Learning Independence is not GST-free as second-hand goods because the novelty cups were trading stock of the business. These cups are not second-hand goods.
End of example