• 7.5 Input tax credits

    7.5.a. What input tax credits are available where the value of a vehicle exceeds the car limit?

    Non-interpretative - straight application of the law.

    If:

    • you are entitled to an input tax credit for a creditable acquisition/importation of a car
    • you are not entitled to quote an Australian business number (ABN) for the purposes of the Luxury Car Tax Act in relation to the supply to which the creditable acquisition/importation relates
    • the GST-inclusive market value of the car exceeds the car limit ($57,466 for the 2011-12 financial year) for the financial year in which you first used the car for any purpose.

    the maximum amount of the input tax credit on the acquisition or importation is an amount equal to 1/11th of that limit. The input tax credit is reduced if you do not use the vehicle solely for a creditable purpose and the phasing in rules will still apply.

    However, the limit on the input tax credits does not apply to:

    • emergency vehicles
    • commercial vehicles that are not designed for the principal purpose of carrying passengers
    • motor homes or campervans, or
    • vehicles specifically fitted out for transporting people with a disability seated in wheelchairs (unless the supply of the car was GST-free).

    7.5.b. Where a business acquires a car by lease, is the amount of input tax credits on the lease payments limited to 1/11th of the car limit?

    Non-interpretative - straight application of the law.

    Where a business acquires a car by lease, the amount of input tax credits that the business can claim is not limited to 1/11th of the car limit. The business may be entitled to claim input tax credits for the amount for GST included in each lease payment if it uses the vehicle wholly for a creditable purpose.

    Paragraph 69-10(4)(b) of the GST Act states that section 69-10 of the GST Act, which limits the input tax credit on cars over the car limits, does not apply to cars acquired by way of lease.

      Last modified: 07 Jun 2012QC 16411