Sale of Financed Vehicle (GST Registered Business)
If you sell a business vehicle that is financed, and the sale proceeds are used to payout the finance owing on the vehicle, you still need to remit GST on the total sale price. There is no Input Tax Credits to claim on the finance payout as loans do not include GST.
The sale is deemed to include GST because you are selling a business asset and the business is GST registered. It needs to be included in your next BAS.
A Ford Econovan is financed by Ford Financing and the payout figure is $25,000.
The Econovan is eventually sold back to the Ford dealer for $33,000.The Dealer forwards $25,000 to Ford Financing and $8,000 to the seller.
Even though directly the seller receives $8,000, they have received the benefit of $33,000. With a portion ($25,000) going to paying out the finance owing on the vehicle.
$3,000 of GST is deemed collect on the sale ($33,000/11) and must be included in the sale period’s BAS.
If you have questions in relation to the above, or any other matters, please do not hesitate to contact our office on 1300 620 345.