What Is NITC
Notional Input Tax Credits (NITC) is an arrangement where a dealership elects not to claim the Input Tax Credit for a unit on their Business Activity Statement (BAS) until that unit has actually sold. This article explains what NITC is, how to set it up in Blackpurl, how it works, and how to claim NITC early if needed.
For a broader overview of how Blackpurl handles NITC, see Notional Input Tax Credit (NITC) Accounting Entries in Blackpurl (Australia Only).
The conversation about NITC typically begins during the Activation process — your Activation Specialist will discuss your options. Blackpurl does not advocate for or against NITC, but provides Australian dealerships with the relevant options to support either approach. Please discuss your dealership's specific requirements with your accountant. If your dealership does not elect to use NITC, no further action is required.
How to Set Up NITC in Blackpurl
Blackpurl supports NITC accounting in two scenarios:
When stocking in a unit through Unit Ordering > Unit Receiving
When stocking a trade-in unit through Customer Order > Unit Deals - Trade In
In both cases, you need to configure the NITC settings in Tax Activity. To get there, go to the Blackpurl header and select Tools > Tax Activity.
Once in Tax Activity, open the Settings tab and locate Accrued Tax Controls — Accrue Input Tax until Units are sold (NITC). Move the toggle to enable it.
After enabling NITC, additional fields appear for you to complete.
NITC Settings Reference
The following settings become available once NITC is enabled.
Accrue sales tax until units are sold (NITC) | Enables the NITC logic in Blackpurl. This must be on for any NITC processing to occur. |
Enable tax accrual on order units by default | When enabled, NITC logic is applied by default to all order units. Turn this on if you want NITC to be the standard behaviour rather than a per-order selection. |
Notional input tax category | The tax category used to hold the Notional Input Tax. Blackpurl recommends creating a dedicated tax category and assigning a clearing General Ledger (GL) account where the tax waits until the unit is sold. |
Sales tax liability category | The tax category to use for the Sales Tax Liability. |
Purchase tax liability category | The tax category to use for the Purchase Tax Liability. |
Notional input tax expense category | The tax category to use for the Notional Input Tax Expense. |
How NITC Works
Accounting for NITC When Stocking in a Unit Through Unit Ordering
When processing a Unit Order, if the dealership elects to accrue purchase tax until the unit is sold, ensure the relevant toggle is set to YES on the order.
When processing Unit Receiving, confirm the relevant tax details. The tax amount is then held in the General Ledger account assigned to your NITC Tax Category — acting as a clearing account — until the unit is sold.
Once the unit sells, the tax can be claimed and the GL assigned to the NITC Tax Category is cleared. Blackpurl and your accounting package handle the GST treatment automatically for BAS purposes. The NITC is held in the clearing GL and, when it needs to be claimed, it is moved to the relevant GST section for BAS reporting. No calculations are required from the dealership.
Accounting for NITC on Trade-In Units
When a trade-in is added to a Customer Order > Unit Deal and subsequently stocked, the dealership can elect not to claim the Input Tax Credit on the trade-in until it has actually sold.
When the trade-in is stocked from a Customer Order Unit Deal, the relevant tax is held in the GL account assigned to your NITC Tax Category until the unit sells. Once the unit is sold, the tax can be claimed and the NITC Tax Category GL is cleared to the tax liability account. The original trade-in value and the difference in tax are then allocated to the GL assigned to the Notional input tax expense category.
Claiming NITC Before the Unit Is Sold
There may be situations where a dealership needs to claim the NITC before a unit has sold. Blackpurl allows you to manually trigger this claim, which automatically creates the relevant journals in your accounting package so the tax can be claimed on your BAS.
1. Navigate to the Unit Record for the unit you want to claim NITC on early. The Unit Record displays the amount currently being withheld as NITC.
2. In the Price & Cost Tracking section of the Unit Record, click ACTIONS > Manually Claim NITC.
3. A confirmation dialog appears. Click YES to confirm.
4. The Unit Record updates to indicate that NITC will now be claimed.
Blackpurl automatically sends a journal to your accounting package, moving the NITC amount from the NITC clearing GL account to the relevant GST section on your BAS. No further action in the accounting package is required.