GST Second-Hand Goods Calculator NZ 2026

If your GST-registered business buys used goods (a vehicle, equipment, furniture, machinery) from a private seller who isn't GST-registered, you can still claim a GST input tax credit of 3/23 of the purchase price under section 3A of the GST Act. This calculator works out the credit, applies the associated party limitation if relevant, and apportions for any non-business use. Most accountants miss these credits because the seller doesn't issue a tax invoice.

The second-hand goods credit explained

GST input tax is normally only available when GST is charged on the supply. Section 3A of the GST Act 1985 creates an exception for second-hand goods bought by a GST-registered person from an unregistered seller: the buyer can still claim a "deemed" input tax credit of 3/23 of the price, even though no GST was actually charged. This prevents the same goods from being effectively taxed twice as they move through the economy.

When the credit applies

• You must be GST-registered
• The goods must be genuinely second-hand (used and previously paid for by someone else)
• The goods must be in NZ at the time of supply
• The goods must be used to make taxable supplies
• The seller must not have charged GST (typically because they are unregistered)
• Excluded categories: livestock, fine metal, and goods made from fine metal

Land transactions

The second-hand goods credit can apply to land purchases from unregistered sellers, including residential property if the buyer intends to use it for taxable supplies (e.g. a local authority buying a house for road widening, or an investor buying a residential property for short-stay accommodation that will be GST-registered).

Associated party limitation

To prevent abuse, when the seller and buyer are associated persons (related family members, related companies, trusts in common control), the input tax credit is limited to the LESSER of:

• The GST component of the original cost to the seller (often $0)
• 3/23 of the purchase price
• 3/23 of the open market value

From 30 March 2022, additional rules apply when goods have been transferred between multiple associated parties before being sold to a registered person. The credit is limited based on the GST charged when the goods were last sold by an unrelated party.

Sources

• GST Act 1985 Section 3A - Meaning of input tax
• IRD - Claiming GST
• IRD - Second-hand goods input tax credit (technical)

Related calculators

• GST Calculator — standard 15% GST
• Reverse GST Calculator — extract GST from inclusive amount
• GST Change of Use Calculator — if business use % changes later
• GST on Imports — for imported goods instead