Claiming GST credits – vehicle used solely for business
You’re generally entitled to claim a GST credit for the GST included in the vehicle price, provided you have a tax invoice, and:
- you use a motor vehicle solely in carrying on your business
- you're registered for GST.
You must include the amount you paid for the motor vehicle at label G10 (capital purchases) on your activity statement.
Claiming GST credits – vehicle used partially for business
If you use a motor vehicle partly in carrying on your business, you’re generally entitled to claim a partial GST credit based on how much you use the motor vehicle in carrying on your business.
You must include only the proportion of the cost of the motor vehicle that relates to business use at label G10 on your activity statement.
If you use the accounts method to work out your GST amounts, you include the GST payable on the purchase of the motor vehicle (or the proportion that relates to business use) at label 1B.
Purchasing a car for more than the car limit
Special rules apply for cars with a value exceeding the car limit. The car limit is used to calculate depreciation deductions under the income tax law. More information is available to help you work out your car cost limit for depreciation.
Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of that limit. For 2023–24 the maximum GST credit you can claim is $6,191 (that is, 1/11 × $68,108). This limit also applies to cars which are fuel efficient.
If you purchase a car with a price that is more than the car limit, you include only the amount of the car limit (or the proportion of the car limit relating to business use) at label G10.
If you use the accounts method to work out your GST amounts, include one-eleventh of the car limit (or the proportion that relates to your business use) at label 1B (GST on purchases). If you use the calculation sheet method to work out your GST amounts, use the calculation sheet to work out how much to include at label 1B.
Example: purchasing a new car for the business
Darren purchases a new car for $91,315 (including $8,000 GST and $3,315 luxury car tax) on 12 July 2023. Darren plans to use the car 100% in carrying on his business. As the car limit for the 2023–24 financial year is $68,108, the maximum GST credit Darren can claim is $6,191 (1/11 × $68,108).
Darren reports $68,108 at label G10 on his activity statement and includes a GST credit of $6,191 at label 1B.
If Darren planned to use the car only 50% in carrying on his business, he would report $34,054 at label G10 and include a GST credit of $3,095 (50% of $6,191) at label 1B.
Darren cannot claim a credit for the luxury car tax paid on the car.
End of exampleExceptions
In certain circumstances you can claim a GST credit for the full amount of GST included in the price of a car even if the car costs more than the car limit.
The car must be used in carrying on your business and at least one of the following conditions must be met:
- you hold the car solely as trading stock, other than holding the car for hire or lease
- you carry out research and development for the manufacturer of the car
- you export the car in circumstances where the export is GST-free
- it is an emergency vehicle
- it is a commercial vehicle that is not designed for the principal purpose of carrying passengers
- it is a motor home or campervan
- it is a vehicle specifically fitted out for transporting disabled people seated in wheelchairs (unless the sale of the car was GST-free).
Purchasing a luxury car
A luxury car is a car that has a GST-inclusive value that is higher than the luxury car tax threshold. You cannot claim a credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.
Leasing a car
If you lease a car, you may be entitled to claim a GST credit for the GST included in each lease payment, based on the amount you use the car in carrying on your business. The amount of GST credit you can claim for GST included in the lease payments is not limited to one-eleventh of the car limit.
Purchasing a second-hand motor vehicle
If you purchase a second-hand motor vehicle from someone who is not registered for GST and you are purchasing the vehicle to sell or exchange it, you may be entitled to claim a GST credit.
If the cost of the vehicle is more than $300, you can claim the GST credit when you sell the vehicle, provided the sale of the vehicle by you is a taxable sale. The credit is the lesser of either:
- one-eleventh of the amount you paid for the vehicle
- the amount of GST payable when the vehicle is sold.
If you purchase a second-hand vehicle from someone who is not registered for GST and you don’t plan to sell or exchange the vehicle, you cannot claim a GST credit.
Work out how to account for GST when you dispose of a motor vehicle.
For more information and examples of GST, see:
- GST and the disposal of capital assets
- GSTR 2006/4 Goods and services tax: determining the extent of creditable purpose for claiming input tax credits and for making adjustments for changes in extent of creditable purpose.