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Edited version of your private ruling
Authorisation Number: 1012436609433
Ruling
Subject: Goods and services tax (GST) and sale of vehicle
Question
Will GST be payable by you on your sale of the vehicle?
Answer
Yes.
Relevant facts and circumstances
You are registered for GST.
You purchased a vehicle.
You were not entitled to an input tax credit on your purchase of the vehicle because you were not registered for GST at that time.
You used the vehicle 100% for business purposes.
You will sell the vehicle.
You will supply the vehicle wholly within Australia under the sale arrangement.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-20
A New Tax System (Goods and Services Tax) Act 1999 section 9-40
Reasons for decision
GST is payable by you on your taxable supplies.
You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which states:
You make a taxable supply if:
(a) you make the supply for *consideration; and
(b) the supply is made in the course or furtherance of an *enterprise that
you *carry on; and
(c) the supply is *connected with Australia; and
(d) you are *registered, or *required to be registered.
However, the supply is not a *taxable supply to the extent that it is *GST-free
or *input taxed.
(*Denotes a term defined in section 195-1 of the GST Act)
Where an individual sells an asset that they used in their enterprise, their sale of the asset is a supply made in the course or furtherance of the enterprise that they carry on.
You will satisfy the requirements of section 9-5 of the GST Act. This is because:
· you will supply the vehicle for consideration (the sale price)
· you will supply the vehicle in the course or furtherance of an enterprise that you carry on (because you used the vehicle in your business)
· the supply will be connected with Australia
· you are registered for GST, and
· the sale will not be GST-free or input taxed.
Therefore, you will make a taxable supply of the vehicle. Hence, GST will be payable on your sale of the vehicle.
The fact that you were unable to claim an input tax credit on your purchase of the vehicle will not prevent you from having a GST liability on your sale of the vehicle. There is no requirement that an entity must be entitled to an input tax credit on its purchase of an asset in order to have a GST liability on its on-sale of the asset.
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