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Friday, 20 July 2012

Hire Purchase – GST Claiming has changed 1July12

  1. Previously with a HP the amount of interest in each payment needed to be taken into account in working out the GST component of a payment or a contract. ie: there was no GST on the interest portion. From 1 July the whole HP contract amount & all payments are treated as ‘taxable supply’ & therefore all has GST on it. No more dissection for HPs. Ie the interest will now have GST on it. 

  2. Also a taxpayer who reported on a cash basis for GST, could not claim back the GST on the whole contract upfront, they had to claim back the GST on the capital portion of each payment. From 1 July cash based reporters can now claim back all the GST on the contract upfront, the same as an accrual based reporter. Only on NEW HP contracts taken out after 1/7/12

  3. Together this means GST applies to the entire contract amount of a HP & all the GST can be claimed back from the outset. ie: no GST on each payment.

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