Claiming the GST on a new motor vehicle purchase

Claiming the GST on a new motor vehicle purchase

Claiming the GST on a new motor vehicle purchase

If your business has motor vehicles (under 1 ton & less than 9 passengers) you are probably already aware of the logbook method for claiming business related expenses such as running costs and decline in value.

Earlier this year there was a change to the method for calculating the GST you can claim on the purchase of a new vehicle that now makes it imperative to use a logbook (or diary) for the first four weeks after the new purchase to calculate your business-use percentage for the purpose of calculating the GST you can claim.

For those already keeping a logbook there is no additional requirements as you can use your existing logbook. Our recommendation is that businesses with a motor vehicle should keep a logbook for a continuous period of at least 12 weeks commencing from time of purchase of a motor vehicle, by doing so you satisfy the requirements for calculating both:

  • the GST you can claim on the new motor vehicle purchase and
  • business related expenses you can claim

By keeping a logbook for a continuous period of at least 12 weeks you satisfy the tax office recording requirements for 5 years before you are required to start the process again (if still required and assuming there have been no material changes to your motor vehicle use).

 

Can I claim the GST on a new car purchase?

Generally speaking, you can claim GST on the purchase of a new motor vehicle if you meet the following criteria:

  • you intend to use your purchase solely or partly in carrying on your business and the purchase does not relate to making input-taxed supplies
  • the purchase price included GST
  • you provide, or are liable to provide, payment for the item you purchased
  • you have a tax invoice from your supplier

 

How much GST can I claim on a new car?

  • When it comes to claiming GST on a car, it’s very similar to claiming GST on any other business expense.
  • You can only claim the GST to the percentage that it relates to earning an income in your business.
  • So you need to keep a logbook. A logbook tracks the number of business-related kilometres that you drive, and your total kilometres in that time.  This will give you your ‘logbook percentage’.
  • Your logbook percentage will tell you the percentage of GST, and tax deductions for car related expenses that you can claim in your BAS and tax return.
  • Also note that if you buy a car with a GST-inclusive value above the LCT (Luxury Car Tax) threshold, there are limits to the GST you can claim based on the fuel efficiency of the vehicle

 

When can I claim the GST on a new car?

  • If your business is registered for GST on a cash basis then you can claim the GST on the new car in the quarter that you take delivery (or settlement) of your car. This is because either your finance company has ‘paid’ for the car on that date.  Or, you’ve paid for that car in full from your bank account.
  • Your upfront claim of the GST can be used to fund the first few instalments payable to your finance company.

If you have any questions regarding claiming the GST and/or business-related expenses on motor vehicles please contact our office.

Watts Price Accountants (Horsham) 03 5382 3001 or mail@wattsprice.com.au

Knights Accounting (Rupanyup) 03 5385 5330 or info@knightsaccounting.com.au



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