Steve exports high quality custom car parts to other countries and is registered for GST. In August of the current year he exported some parts to a New Zealand mechanical business and the parts were returned to him because they did not fit. Steve undertakes the repairs and uses a number of smaller components in the process. The repaired car parts were returned to the customer in New Zealand in December of the current year. Steve charged the customer for the repair including the parts used. In relation to GST which of the following statements is most correct? a.Steve will not be entitled to input tax credits for any costs associated with the initial sale or the repair of the parts. b.Steve should charge GST on the initial sale but not on the repairs. c.Steve should charge GST on both the initial sale and the repairs. d.Steve should not charge GST on any part of the transaction.

Correct Option is (c) -Steve should charge GST on both the initial and the repair.

Answered: Steve exports high quality custom car…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Steve exports high quality custom car parts to other countries and is registered for GST. In August of the current year he exported some parts to a New Zealand mechanical business and the parts were returned to him because they did not fit. Steve undertakes the repairs and uses a number of smaller components in the process. The repaired car parts were returned to the customer in New Zealand in December of the current year. Steve charged the customer for the repair including the parts used. In relation to GST which of the following statements is most correct?

	a.	Steve will not be entitled to input tax credits for any costs associated with the initial sale or the repair of the parts.
	b.	Steve should charge GST on the initial sale but not on the repairs.
	c.	Steve should charge GST on both the initial sale and the repairs.
	d.	Steve should not charge GST on any part of the transaction.

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