How does GST apply to the sale of equipment between businesses in Australia?

When a GST-registered business sells equipment in the course of its enterprise, the sale is generally a taxable supply under the A New Tax System (Goods and Services Tax) Act 1999 (Cth), and GST of 10% is payable by the buyer. The seller must issue a valid tax invoice setting out the GST amount. If the buyer is also GST-registered and is acquiring the equipment for use in its business (a creditable acquisition), the buyer may claim an input tax credit (ITC) for the GST paid. This effectively means that GST-registered businesses paying GST on equipment purchases can offset that amount against GST they collect on their own sales. Private individuals selling their own personally used equipment who are not GST-registered do not charge GST. If the equipment is being sold as part of the sale of a business as a going concern under section 38-325 of the GST Act, the supply may be GST-free if all the going concern conditions are satisfied.

What is a PPSR search and why does it matter when buying used equipment in Australia?

The Personal Property Securities Register (PPSR) is a national online register maintained under the Personal Property Securities Act 2009 (Cth) that records security interests in personal property, including tools, machinery, and business equipment. Security interests over equipment commonly arise from equipment finance arrangements such as chattel mortgages, hire purchase agreements, finance leases, and retention of title clauses. If you buy second-hand equipment from a seller who has borrowed money against it (for example, to buy it originally using equipment finance) and the loan has not been fully repaid, the lender’s security interest may still be registered on the PPSR. If that security interest was registered before the sale and is not discharged, you may take the equipment subject to it — meaning the lender could potentially repossess the equipment even after you have paid for it. A PPSR search by the equipment’s serial number at ppsr.gov.au is a simple and low-cost way to check for registered encumbrances before committing to a purchase.

What is a retention of title clause and how does it work in an equipment sale?

A retention of title (ROT) clause — also known as a Romalpa clause or a PPSA security interest — is a contractual provision that allows the seller to retain ownership of goods that have been delivered to the buyer until the purchase price has been paid in full. In Australia, a retention of title arrangement is recognised as a type of security interest under the Personal Property Securities Act 2009 (Cth) (PPSA). For a retention of title to be effective against third parties (such as the buyer’s creditors or an administrator or liquidator in the event of the buyer’s insolvency), the seller must register the security interest on the PPSR before the goods are delivered to the buyer. If the ROT security interest is not registered on the PPSR, it may not be enforceable against third parties, meaning the seller could lose both the equipment and any unpaid purchase price if the buyer becomes insolvent. A retention of title clause is particularly important when payment is deferred or made in instalments.

Do consumer guarantees under the Australian Consumer Law apply to equipment sales?

The Australian Consumer Law (ACL) applies consumer guarantees to all supplies of goods and services in trade or commerce where the goods are of a kind ordinarily acquired for personal, domestic, or household use, or where the price does not exceed $100,000 (subject to certain exceptions for goods acquired for re-supply or for use in a production or manufacturing process). Consumer guarantees include guarantees of acceptable quality, fitness for a disclosed purpose, correspondence with description, and title. Where the ACL consumer guarantees apply, they cannot be excluded, restricted, or modified by the parties’ agreement — any attempt to do so is void under section 64 of the ACL. However, in many business-to-business equipment sales where the buyer is acquiring the equipment for use in its commercial operations, the transaction may not involve a ‘consumer’ within the meaning of the ACL, and the parties have greater freedom to agree on the warranty terms.

What information should be included in an equipment Bill of Sale to identify items for PPSR purposes?

For a PPSR registration or search to be effective, the equipment must be identifiable by a serial number (where one exists). Under the PPSR rules, goods with a serial number that falls within a prescribed class (which includes motor vehicles, watercraft, aircraft, and certain other categories) must be registered by serial number to take priority in certain circumstances. For other equipment with serial numbers (such as power tools, machinery, IT equipment, and medical equipment), registering by serial number is strongly recommended as it provides the best protection and makes it easiest for prospective buyers to search the register. The Bill of Sale should record the make, model, model number, year of manufacture (where applicable), and the complete serial number of each significant item of equipment, so that the PPSR registration or search can be conducted accurately.

Bill of Sale — Equipment / Tools / Machinery (Australia) — Australia

Create an Australian Bill of Sale for the private or commercial sale of business equipment, tools, or machinery. Covers serial numbers for PPSA security interest identification and PPSR registration, GST (10%) and input tax credit (ITC) treatment for business sales, retention of title clause for deferred or instalment payments, Australian Consumer Law statutory guarantees, and transfer of title and risk. Suitable for power tools, workshop equipment, IT equipment, office equipment, medical equipment, catering equipment, audio-visual production equipment, and other trade or business goods.

What Is a Bill of Sale — Equipment / Tools / Machinery (Australia)?

An Australian Equipment Bill of Sale is a written legal document that records the sale and transfer of ownership of business equipment, tools, or machinery from a Seller to a Buyer. It captures all essential identifying details of the equipment — including the type of equipment, make, model, serial number, and specifications — together with the purchase price, GST treatment, payment method, condition, and the terms governing when title and risk of loss pass from the Seller to the Buyer.

Business equipment encompasses a vast range of goods used in trade and commerce: power tools and hand tools used by tradespeople and builders; workshop and factory machinery used in manufacturing and processing; IT equipment such as computers, servers, and networking gear; office equipment including printers and photocopiers; medical and dental equipment used by healthcare practitioners; catering and hospitality equipment used in restaurants and commercial kitchens; and audio-visual and production equipment used in the creative industries.

Equipment sales in Australia are governed by several key pieces of legislation. The Personal Property Securities Act 2009 (Cth) (PPSA) governs security interests in equipment and the operation of the Personal Property Securities Register (PPSR). A PPSR search is essential before purchasing second-hand equipment, as a financier may have a registered security interest over the equipment that predates the sale. The Australian Consumer Law (ACL), which is Schedule 2 to the Competition and Consumer Act 2010 (Cth), applies mandatory consumer guarantees to equipment sales made in trade or commerce. The A New Tax System (Goods and Services Tax) Act 1999 (Cth) determines whether GST of 10% applies to the sale, and whether the buyer can claim an input tax credit (ITC).

For sales where payment is deferred or made in instalments, a retention of title (ROT) clause — registered on the PPSR — protects the seller’s ownership interest in the equipment until full payment is received.

When Do You Need a Bill of Sale — Equipment / Tools / Machinery (Australia)?

An Australian Equipment Bill of Sale is needed whenever tools, machinery, or business equipment changes hands and the parties want a written record of the transaction and the transfer of ownership. Common situations include:

Tradesperson and contractor equipment sales. When a plumber, electrician, carpenter, or other tradesperson sells their tools or equipment to another tradesperson, a Bill of Sale provides documentation of the agreed terms and the transfer of ownership.

Business equipment upgrades. When a business sells its existing equipment to fund the purchase of newer or more capable equipment, a Bill of Sale documents the transfer and supports the tax accounting treatment for both parties.

IT and computer equipment sales. When a business sells surplus computers, servers, printers, or other IT equipment, a Bill of Sale records the transaction and the GST treatment.

Catering and hospitality equipment sales. When a restaurant, café, or food business sells commercial kitchen equipment (such as commercial ovens, refrigerators, or coffee machines), a Bill of Sale documents the sale and any included accessories.

Auction and liquidation sales. When equipment is sold by auction or by a liquidator as part of a business wind-up, the Bill of Sale documents the seller’s authority to sell and the agreed terms.

Deferred payment or instalment sales. Where the buyer does not pay the full price upfront, a retention of title clause and PPSR registration protects the seller’s ownership interest until full payment is received.

What to Include in Your Bill of Sale — Equipment / Tools / Machinery (Australia)

A well-drafted Australian Equipment Bill of Sale should include the following key elements:

Precise equipment identification. The equipment must be described with sufficient detail to identify each item uniquely, including type, make, model, model number, year, serial number, quantity, and condition. A separate list of accessories and additional components should be included where applicable.

Serial numbers for PPSR. The serial number of each significant item should be recorded, as serial numbers are used to conduct PPSR searches and to register security interests on the PPSR.

Purchase price and GST. The price must be stated in Australian Dollars (AUD) and the GST treatment must be specified clearly. For commercial sales by GST-registered sellers, a valid tax invoice must be issued.

PPSR search confirmation. The Bill of Sale should confirm whether a PPSR search was conducted and include the seller’s warranty that the equipment is free from registered security interests.

Retention of title clause. Where payment is deferred or made in instalments, a retention of title clause and PPSR registration protects the seller until full payment is received.

Transfer of title and risk. The Bill of Sale should specify when title and risk pass, and which party bears the cost of collection and transport.

ACL compliance. Consumer guarantee exclusions should only be included to the extent permitted by law, with an express acknowledgement that ACL guarantees that cannot be excluded continue to apply.

What Is a Bill of Sale — Equipment / Tools / Machinery (Australia)?

When Do You Need a Bill of Sale — Equipment / Tools / Machinery (Australia)?

What to Include in Your Bill of Sale — Equipment / Tools / Machinery (Australia)

Frequently Asked Questions

Related Documents

Bill of Sale (Australia)

Bill of Sale — Industrial Machinery / Equipment (Australia)

Bill of Sale — As-Is / No Warranty (Australia)

Bill of Sale — Farm Equipment (Australia)

Loan Agreement (Australia)