The Tax Office has released a guide on how GST applies to goods held on consignment – that is, goods offered for sale that belong to someone else.
The guide notes the GST treatment of goods sold on consignment depends on the nature of the consignment arrangement and whether or not the owner of the goods is registered for GST.
In a broad sense, it states that if your business is registered for GST and you sell goods on consignment (ie under a 'sale or return' arrangement), you will have to account for GST on the sale of those goods if the agreement stipulates that you will buy the goods from their owner when a buyer is found for those goods.
Conversely, if you sell consigned goods on behalf of the owner as his or her agent, GST is payable on the supply only if the owner is registered for GST and is making the supply in the course or advancement of their enterprise.
This means that if you are acting as an agent, you will need to establish whether or not the owner is registered for GST and whether the goods are being sold in the course of their business or in their capacity as private consumers.
If you are registered for GST, you will need to include GST on the commission you charge to the owner of the goods.
To read more,
click here.