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#AccountingAnswers - Claiming GST on a new car

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How much GST can I claim on a new car?

When it comes to claiming GST on a car (Goods & Services Tax), 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.

When can I claim the GST on a new car?

This depends on how the business is registered for GST.

Small businesses are usually registered for GST on a cash basis.

Most larger businesses (turning over $2M in a year) will need to be registered for on an accruals 'Accruals' - or non-cash basis.

Small Business - under $2M turnover

If you're like most small businesses, and GST is 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.

Big Business - over $2M turnover

When it comes to accruals GST, you can claim the GST when you sign the contract for the new car.

You put this claim in on your quarterly or monthly BAS (business activity statement).

 

Two closing points:

Your up front claim of the GST can be used to fund the first few instalments payable to your finance company.

As a small business, it doesn't matter whether you or the finance company pays for the car - you can still claim the GST when you pick up the car!