Originally posted by Sydneykid
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The second-hand goods credit
This is the problem that the second-hand goods credit was intended to solve. It was intended to give the second-hand goods dealer a hypothetical input tax credit equal to 1/11th of the sale price (or trade in value) of the car sold to the dealer by the individual. Thus, the net tax collected on the sale by the second-hand dealer would only be 1/11th of the dealer's margin (ie. 1/11 x (Sale Proceeds – Trade in value).
The ultimate sale of the goods is critical. The second-hand goods credit can only be claimed when the goods are sold and is limited to the lesser of 1/11th of the trade in value or 1/11th of the sale proceeds.
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