This Draft Determination, issued today Wed 15.5.2013, broadly states that for the purposes of Div 66 of the GST Act, the term “second-hand” takes its ordinary meaning and requires a common sense approach. Therefore, it says goods are second-hand if they have been previously used or are not new. However, the Draft Determination states that goods do not become second-hand simply because they were sold by a manufacturer or a distributor before being retailed.
Generally, the sale by an unregistered entity of second-hand goods to a GST registered entity is not a taxable supply under s 9-5, and hence not a creditable acquisition under s 11-5. However, if s 66-5(1) is satisfied and the requirements of s 11-5 are otherwise met, the acquisition of second-hand goods by a registered entity will be a creditable acquisition.
The Draft Determination states that ss 66-5(1) and 66-40(1)(a) will be satisfied where an entity that acquires second-hand goods is in the business of buying and selling second-hand goods, and the goods are acquired for the purposes of the being sold or exchanged in the ordinary course of that business. However, it indicates, second-hand goods are not acquired for the purposes of sale or exchange in the ordinary course of business simply because there is an intention that the goods will ultimately be sold after they are no longer acquired.
DATE OF EFFECT: When the final Determination is issued, it is proposed to apply both before and after its date of issue.
COMMENTS are due by 12 June 2013. ATO contact: Steven Koufomanolis – Tel: (03) 9275 2764; Fax: (03) 9275 2412; Email: steven.koufomanolis@ato.gov.au.
[LTN 92, 15/5/13]