Business Asset Deemed Supplies: The 2002 Valuation Amendment

Key steps and distinctions

The circular concerns goods forming part of business assets, including fixed assets and non-residential property, rather than trading inventory alone. It describes deemed supplies on a transfer or disposal without consideration and immediately before a person ceases to be GST-taxable. Earlier wording had commonly been read as requiring original cost, effectively reversing the input tax claimed even after assets had aged. The amendment enacted on 23 December 2002 aligned the statutory valuation with the existing administrative treatment of used goods. First determine what the business would pay at that time for identical goods, taking their age and condition into account. If an identical-goods value is unavailable, use comparable goods of the same age and condition. If neither is available, use the cost of producing those goods at the relevant time. The purchase value excludes GST. The important distinction is between historical accounting cost and the prescribed contemporary value for output tax. This archival circular explains the legislative change; current eligibility, exceptions and deregistration requirements must be assessed under the current rules before accounting for a deemed supply.