Verified for 2026 Tax Year

GST on Second-Hand Goods

Learn how to claim a GST input tax deduction on second-hand goods bought from unregistered sellers on TradeMe, Facebook Marketplace, or privately.

The 10-Second Rule

If you buy a second-hand item for your business from an unregistered private person, you can still claim a GST refund equal to **3/23 of the purchase price**. You don't need a tax invoice, but you do need meticulous record keeping.

1. What Qualifies as a "Second-Hand Good"?

To claim the credit, the item must literally be a pre-owned physical object situated in New Zealand. It cannot be new.

Eligible (Goods)

✓ Used motor vehicles
✓ Pre-owned machinery or tools
✓ Land purchased from a private seller
✓ Used office furniture or laptops

Not Eligible (Services & Intangibles)

✗ Intellectual property (trademarks)
✗ Livestock or primary produce
✗ Shares or financial instruments
✗ Digital software licenses

2. The 3/23 Calculation

Because an unregistered seller cannot charge GST, there is technically no "inclusive GST" to reverse. However, the IRD allows you to extract an input tax deduction using the 3/23 fraction, treating the purchase as if it had been a standard taxable supply.

Example: Buying a Van on Facebook Marketplace

A courier buys a used van for $11,500 from a private seller (who is not registered for GST). The seller does not give a tax invoice.

Calculation: $11,500 × 3 ÷ 23 = $1,500

The courier can claim $1,500 as an input tax credit in their next GST return.

3. Strict Record-Keeping Rules

Since you don't have a tax invoice, you must create and retain your own documentation. The IRD is extremely strict about this during an audit. You must record:

✓ The name and address of the supplier.
✓ The date you made the purchase.
✓ A clear description of the goods (e.g., make, model, VIN for cars).
✓ The quantity or volume.
✓ The total price paid.

4. The Payment Requirement

Normally, if you are on the Invoice Basis for GST, you can claim GST as soon as you receive an invoice, even before paying it.

Critical Exception: Second-Hand Goods

For second-hand goods bought from unregistered sellers, everyone is on the payments basis. You can only claim the credit in the taxable period when you actually make the payment. If you pay it off over 6 months, you must claim the GST incrementally across those 6 months.

Frequently Asked Questions

Can I claim GST on a second-hand item bought from TradeMe?

Yes, if you buy a second-hand good for your business from an unregistered private seller, you can claim an input tax deduction equal to 3/23 of the purchase price.

Do I need a tax invoice from a private seller?

No, private individuals cannot issue tax invoices. Instead, you must keep a record of the seller's details, the date, a description of the goods, and the amount paid.

Can I claim a second-hand goods credit if I haven't paid yet?

No. Unlike normal purchases where you might claim on an invoice basis, you can only claim the second-hand goods credit to the extent that you have actually made payment.

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