Notional Input Tax Credit (NITC) is an Australian tax practice where a dealership does not claim input tax credits on its Business Activity Statement (BAS) for unit purchases until those units are actually sold. The withheld input tax credits are referred to as NITC. This also applies to trade-in units where the customer receives the benefit of a tax credit on the trade-in — the dealership withholds that credit until the traded-in unit is later sold.
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Blackpurl does not advocate for or against adhering to NITC. This is a decision your dealership needs to make in consultation with your accountant. If you do choose to adhere to NITC, Blackpurl can be configured to accommodate it. For a conceptual overview of NITC, see Notional Input Tax Credits (NITC) in Blackpurl (Australia Only) (no longer available).
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If your dealership adheres to NITC, let your Activation Specialist know at the point of activation. Your Activation Specialist will configure this for your dealership. Once set up, all NITC-related transactions will occur automatically in Blackpurl and will integrate to your accounting package. Discuss any questions with your Activation Specialist before going live.
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There are up to four General Ledger (GL) accounts involved in NITC accounting entries:

When a dealership purchases inventory, a Vendor Tax Invoice (for parts or units) is processed in Blackpurl and integrates to your accounting package (Xero or QuickBooks Online). Normally, the GST on purchases component of that invoice is claimed immediately. For dealerships adhering to NITC, that GST on purchases amount is withheld until the unit is sold.
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When the Vendor Tax Invoice is processed, the following standard entries are recorded:
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To withhold the GST as NITC, Blackpurl automatically generates a separate journal entry at the time the Vendor Tax Invoice is processed:

When the purchased unit is later sold, the withheld GST can now be claimed. Blackpurl includes the following entries in the Cost of Goods Sold (COGS) journal entry for the deal:
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When a customer trades in a unit on a unit deal and receives the benefit of a tax credit for that trade-in, NITC requires the dealership to withhold the tax credit given to the customer until the traded-in unit is later sold.
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Consider a deal where a customer buys a $11,000 unit (tax inclusive) and trades in a unit valued at $3,300 (tax inclusive). The net sale is $7,700. The standard accounting entries for this deal are:

Because of NITC, the $300 tax credit the customer received on the trade-in must be withheld until that traded-in unit is sold. Blackpurl includes the following entries in the COGS journal entry for the deal to withhold this tax credit:

When a traded-in unit is sold, the dealership can claim the tax credit that was withheld from the original deal. There is an additional condition: if the traded-in unit is sold for less than its original trade-in value, the full withheld credit cannot be claimed — only a reduced amount can be claimed, and the remainder is expensed.
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Using the trade-in from the example above, assume the unit is resold for $4,400 (tax inclusive), which is not less than the original trade-in value of $3,300. The full withheld credit of $300 can be claimed. Blackpurl includes the following entries in the COGS journal entry for the deal selling this trade-in:

If the same traded-in unit is resold for $2,200 (tax inclusive), which is less than the original trade-in value of $3,300, the full $300 withheld cannot be claimed. Only $200 can be claimed and the remaining $100 is expensed to the NITC Expense GL account. Blackpurl includes the following entries in the COGS journal entry for the deal selling this trade-in: