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Edited version of your written advice
Authorisation Number: 1012888105002
Date of advice: 1 October 2015
Ruling
Subject: GST and GST credit for purchase of second-hand goods
In order to protect the privacy and commercial in-confidence components of this private binding ruling the following summary is provided
Question 1
Based on the information provided to the Australian Taxation Office, are you entitled to claim input tax credits (ITCs) under Division 66 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where you acquire second-hand goods for the purposes of sale or exchange (but not manufacture) from individuals who are neither registered for GST nor required to be registered for GST?
Answer
Yes, you are entitled to claim an ITC under Division 66 of the GST Act where you acquire second-hand goods for the purposes of sale or exchange (but not manufacture) from individuals who are neither registered for GST nor required to be registered for GST.
Question 2
If the answer to question 1 is yes, is the ITC to be calculated as 1/11 of the purchase price paid to the unregistered individual supplier?
Answer
Section 66-10 of the GST Act provides that the amount of the ITC is 1/11th of the consideration payable on the second-hand goods. However, if the consideration is more than $300, the credit cannot be more than the amount of GST charged when the goods are sold.