Can I claim GST on a used car bought from a private seller in NZ?

Yes, if you are GST-registered and the car will be used in your taxable activity. Even though the private seller does not charge GST, section 3A of the GST Act allows the GST-registered buyer to claim a second-hand goods input tax credit of 3/23 of the purchase price. For example, a $10,000 used car from a private seller produces a $1,304.35 GST credit when used 100% for business.

What are the requirements for claiming the second-hand goods credit?

Five requirements: (1) you must be GST-registered, (2) the goods must have been used and previously paid for by someone else (genuinely second-hand), (3) the goods must be in NZ at the time of purchase, (4) the goods must be used to make taxable supplies, and (5) you must keep records including the seller's name and address, date of purchase, description, quantity, and price. Livestock and goods made from fine metal are excluded from the second-hand goods rules.

What if I buy from an associated person?

When the seller and buyer are associated persons (related companies, trusts, family), the input tax credit is limited to the LESSER of three amounts: the GST component of the original cost to the seller (if any), the tax fraction (3/23) of the purchase price, and the tax fraction of the open market value. This prevents inflated credits on transfers within related groups. From 30 March 2022 the rules were further tightened to prevent stepped-up credits across multiple associated transfers.

When can I claim the credit if I pay in instalments?

On the payments basis, you claim the credit in the period you actually make the payment. If you pay in instalments, you claim the GST proportionally in the period each instalment is paid. On the invoice basis, you claim the full credit in the period the goods are supplied (regardless of payment timing). Hire purchase arrangements have special rules: the full GST credit is claimed in the period the agreement is entered into, regardless of accounting basis.

GST Second-Hand Goods Calculator NZ 2026

This calculator works out the GST input tax credit you can claim under section 3A of the GST Act when your GST-registered business buys second-hand goods, such as a vehicle, equipment or furniture, from an unregistered seller. Even though no GST is charged on the sale, you can still claim 3/23 of the price paid. You enter whether you and the seller are GST-registered, the type of goods (standard second-hand goods, land, livestock or fine metal, since the last two are excluded), whether the goods were in New Zealand at purchase, the purchase price, and your percentage of business use. If the seller is an associated person, such as a related company, trust or family member, you also enter the GST component of their original cost and the goods' open market value, since the credit is then capped at the lowest of three limits. The calculator returns an eligibility banner explaining your position, then breaks down the purchase price, the 3/23 tax fraction, any associated party limit that applies, the available credit before apportionment, your business use percentage, and the final GST credit you can claim on your next GST return. It also reminds you what records to keep, since the seller will not issue a tax invoice. This is a planning tool: confirm your figures with your accountant or IRD before filing, especially for associated party purchases.

Updated Implements section 3A of the GST Act 1985, including associated party rules updated 30 March 2022.

Advertise on this page

Eligibility check

Are you GST-registered?

Is the seller GST-registered?

Type of goods

Were the goods in NZ when purchased?

Purchase details

Purchase price paid to seller

Percentage taxable (business) use

If the asset is partly for private use or making exempt supplies, only the taxable portion of the credit is claimable.

Associated party check

Is the seller an associated person?

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.