Claiming GST on Second-hand Goods Used Within the Church (Not being Donated Goods)

In some situations you may have purchased second-hand goods to use in the Church to make taxable supplies for GST purposes but didn’t pay GST on the purchase because the seller wasn’t GST registered. The good news is you can still claim a GST credit as long as the goods were located in New Zealand at the time of purchase and you have sufficient records of your purchase.

You may consider buying second-hand items for the Church to save money. Even if the seller isn’t GST registered you can still make a claim for GST.

 Example

Alice purchased a number of second-hand chairs to use in the Church.

She bought the chairs for $160 at a garage sale.

To calculate the GST amount to claim as a credit she would use the following formula: purchase price x 3 ÷ 23 = GST credit that can be claimed $160 x 3 ÷ 23 = $20.86

Alice can claim this amount on the next GST return, as long as she’s kept sufficient records of the purchase.

Second-hand goods are commonly defined as goods previously used and paid for by someone else. In the context of GST, second-hand goods don’t include:

  • new goods
  • primary produce – unless previously used
  • goods supplied under a lease or rental agreement
  • livestock
  • goods which contain gold, silver or platinum in any degree of purity.
  • Second-hand goods purchased from an associated person

When purchasing second-hand goods from associated people, the GST credit you can claim is treated differently.  I will not worry about this aspect but please be aware that an associated person can include:

  • companies controlled by the same persons
  • companies and persons with a 25% or greater interest in the company
  • partnerships, partners and associates of partners
  • relatives by blood, marriage or adoption, to the second degree (including people in a de facto relationship)
  • trustees of a trust and persons who have benefited or are eligible to benefit under the trust
  • trustees and the settlor of a trust, except where the trustee is a charitable or non-profit body
  • trustees of two trusts that have a common settlor
  • two persons who are each associated with a third person.

 Record keeping

If you purchase second-hand goods from someone who isn’t GST registered, you won’t be given a tax invoice to support your GST claim. In this case you must record the:

  • name and address of the supplier
  • date of purchase
  • description of the goods
  • quantity of goods
  • price paid.