Buying second-hand goods for your business can help keep costs down because they are usually cheaper than new goods. At this time of year, you might be able to pick up some good bargains from other businesses as they take advantage of summer sales to upgrade their own equipment.
The good news is that if you’re GST-registered, you can claim a GST credit on secondhand goods bought in New Zealand for your business – even if the seller isn’t registered for GST.
That’s really handy if you, for example, buy a second-hand wheelbarrow from your neighbour to use in your gardening business, or pick up a second-hand printer in an online auction to use in your graphic design business.
It’s pretty obvious that new goods are not considered second-hand when it comes to GST. But certain other goods also can’t be considered second-hand when it comes to GST, including:
- livestock - goods supplied under a lease or rental - primary produce - goods made with fine metals – platinum, gold or silver.
It doesn't matter which accounting method you use, you can only claim GST on what you paid for the goods.
As with all things tax-related, it’s important to keep good records, even if you pay cash at your uncle’s garage sale.