Not sure whether someone could clarify this for me. I recently sold an second hand medical equipment to a friend for over $2000. He requested an invoice as he is going to use it for his business. We agreed this to be a private sale of an second hand product. I only registered for GST two months ago, but I am not selling this equipment as part of my business. I sold the item as I am moving interstate soon and do not have room to take it with me. I provided him with an invoice without GST included. Is this correct? I am confused and please help me out. Thanks in advance.
GST Required for Private Sale to a Friend Who Request an Invoice?
Ldsfyang on 16/04/2023 - 22:26
Comments
Did you own the medical equipment personally or did it belong to your business? If you bought it through your business and claimed the GST as a cost, but then transferred the equipment to yourself for $0…and then sold it for $2k…the ATO might like to have a chat. That's an undisclosed Fringe Benefit.
If you always owned it personally, so you never claimed the GST you spent on it as an expense, then you're in the clear to sell it on for $2,000 which would not include any GST and you don't need to remit that 10% to the govt. You would only add 10% GST if you were registered for GST and disposing of an asset of the business.
One more thing: If you bought it & claimed the expense, then disposed of it for $2k, you might have to note the $2k you received to offset the original expense (or rather, expenses in the current financial year).
I think an accountant may be able to work with you on this.
Thank you for all the helpful comments so far. I did own the equipment personally and did not have an ABN until 2 months ago. My accountant did claim it as work expense for me when it was bought more than 5 years ago. It sounds like I do not to worry about GST in this case but still have to let my accountant know about the transaction.
There is one more thing:
My accountant did claim it as work expense for me when it was bought more than 5 years ago.
Just ensure it's past it's taxable life
It will become a headache for you.
If your friend claims it as a business expense then you will have to pay back the ato on the deductibility of the item you sold.
Its basically double dipping on tax deductibility, the ato wont allow that.
Anything you've claimed on tax and then received money for at disposal need to be adjusted. Almost no one does it though.
If you bought it as a business expense, depending if you are registered for GST or not, will determine if you can produce a GST invoice to your buyer.
The idea is you would have filed a BAS when you first bought it, effecitvely claiming GST as a pass through and now when you sell it, you will also recognise it.
I would just resist the GST invoice and say its not applicable for you and you can't issue it. its a nuisance to deal with now.
DON'T assume they need an invoice just for GST - it's probably more for proof of purchase & expense tracking rather than anything to do with GST. That is, they want a receipt rather than an invoice.
Since you're selling it personally, a handwritten note with the item description, total amount paid and the date of payment would be perfectly fine.
OP says asked for an invoice for business. Not necessarily a Tax Invoice though but yes, just give him a receipt.
No gst payable on 2nd hand goods. Buyer has saved himself $200 and can claim 100% tax deductible in year 1. Tell him not to be greedy.
No GST for private sale of second hand goods as far as I know.