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Edited version of your written advice
Authorisation Number: 1013015389159
Date of advice: 18 May 2016
Ruling
Subject: GST and claiming input tax credit for purchase of a vehicle
Question
Are you entitled to claim full input tax credit for the purchase of a motor vehicle used 100% in your enterprise?
Answer
No. You are only entitled to claim input tax credit equal to 1/11th of the car limit for the financial year in which you first used the car for any purpose.
Relevant facts and circumstances
• You carry on an enterprise of pest control management and registered for goods and services tax (GST).
• You purchased a motor vehicle which will be used 100% in your enterprise.
• The vehicle was imported into Australia and subsequently modified to satisfy the legislative requirements to carry chemicals of a dangerous and harmful nature.
• The vehicle is designed to carry fewer than 9 people and has a carrying capacity of under 1 tonne.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 - section 11-5, 11-20
A New Tax System (Goods and Services Tax) Act 1999 - section 69-10
Reasons for decision
Section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you are entitled to input tax credits for any creditable acquisition that you make.
Section 11-5 of the GST Act states that you make a creditable acquisition if you acquire anything solely or partly for a creditable purpose; and the supply of the thing to you is a taxable supply; and you provide or are liable to provide consideration for the supply and you are registered or required to be registered for GST.
You purchased a motor vehicle to be used 100% in your pest control business. For GST purposes, a car is a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers. Based on the information provided, the vehicle satisfied the definition of a motor vehicle.
Section 69-10 of the GST Act provides that the maximum amount of input tax credit on the acquisition or importation of a car is an amount equal to 1/11th of the car limit for the financial year in which you first used the car for any purpose. 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
• vehicle specifically fitted out for transporting people with a disability seated in wheelchairs (unless the supply of the car was GST-free).
The vehicle you purchased does not belong to the type of vehicles listed above. The fact that the vehicle has been modified to meet the needs for carrying work equipment and dangerous chemicals does not change the characteristic of the vehicle as a motor vehicle.
Therefore, the maximum amount of input tax credits you are entitled to claim on the purchase of the motor vehicle is the amount equal to 1/11th of the car limit for the financial year in which the vehicle was first used by you.