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Motor vehicles held when your GST registration is cancelled

Last updated 12 July 2023

If you cancel your GST registration and you still hold a motor vehicle on which you have claimed or are entitled to claim GST credits, the amount of GST you are liable to pay is subject to an increasing adjustment.

The increasing adjustment takes into account the market value and percentage of business use of the vehicle at the time your GST registration is cancelled.

The GST payable is 1/11 × (market value of vehicle × % of business use).

Example: car sold after ceasing business

Mr Sample ceases business and cancels his GST registration. He has a motor vehicle on hand that has a market value of $22,000. The vehicle is used 80% for business purposes.

The GST payable by Mr Sample is 1/11 × ($22,000 × 80%) = $1,600.

End of example