GST on business vehicles: what you can claim and when

The basic rule

The ATO’s guidance on purchasing a motor vehicle sets out the starting point: to claim a GST credit, your business must be registered for GST, and you must buy the vehicle for use in carrying on your business. If the vehicle is used solely for business, you can generally claim the full credit. If it’s used partly for private purposes, you’re generally entitled to a partial credit based on how much it’s used in the business.

That partial amount is what you report at label G10 on your business activity statement. It sounds simple, and for most vehicles it is. The detail is in three areas: the car limit, private sales and the finance structure.

The car limit cap on passenger cars

For passenger cars, the GST credit you can claim on a purchase is capped at one-eleventh of the car limit:

Financial year	Car limit	Maximum GST credit
2025–26	$69,674	$6,334
2026–27	$69,883	$6,353

If a car costs more than the limit, the GST above the cap isn’t claimable — even if the car is used entirely for business. See our car limit page for which vehicles count as passenger cars.

Exceptions to the cap

The ATO says full GST credits may apply, beyond the cap, where the vehicle is:

• held as trading stock;
• used for manufacturer research and development;
• exported GST-free;
• an emergency or commercial vehicle;
• a motor home or campervan;
• a vehicle used to transport people with a disability.

Many utes, vans and trucks used in business aren’t passenger cars at all under the car limit rules, so the cap doesn’t affect them.

Private sales and GST

GST is only charged by sellers registered for GST selling in the course of their business. The ATO says that if you buy a second-hand vehicle from a seller who isn’t registered, and you’re not buying to resell it, you can’t claim a GST credit. There’s simply no GST in the price.

That matters when you compare prices. A dealer’s ute at a higher sticker price may cost your business about the same as a cheaper private one once the GST credit is factored in. Our dealer versus private sale page walks through it.

How the finance structure changes GST timing

Structure	When you claim GST	Notes
Cash purchase or chattel mortgage	On the purchase	Business owns the vehicle; capped for passenger cars
Commercial hire purchase (from 1 July 2012)	Up front	ATO allows cash-basis businesses to claim one-eleventh of all components up front
Finance lease or operating lease	On each lease payment	ATO says not limited to one-eleventh of the car limit

The ATO’s hire purchase and leasing guidance explains that lease payments are each treated as a separate taxable supply, and that if you later buy the leased goods, you may be able to claim a credit on the GST in that purchase price too.

Working out business use

Your GST credit depends on business use, so it pays to get that number right. A logbook is the most common evidence. For sole traders and some partnerships claiming car expenses, the ATO’s logbook method requires at least 12 continuous weeks of records. Our business-use logbook page and business-use percentage helper cover how it works.

If your business use changes significantly later, there may be adjustments to make. Your accountant will know when that applies.

Common mistakes

• Claiming the full GST on a car over the car limit. The cap applies regardless of business use.
• Claiming GST on a private purchase. No GST was charged, so there’s nothing to claim.
• Forgetting the private-use share. If you use the vehicle privately, the credit should reflect it.
• Claiming before you have a tax invoice. Make sure the paperwork is right.
• Assuming every ute is uncapped. Some dual-cab utes may be passenger vehicles under the rules.

Illustrative example: two vehicles, two outcomes

Illustrative only. A GST-registered building company buys two vehicles in the same quarter: a single-cab tray ute from a dealer, used solely for work, and a sedan for its office manager, priced above the car limit. On the ute, it claims the full GST credit. On the sedan, the credit is capped at $6,353 under the 2026–27 car limit, reduced again for the private-use share. The bookkeeper reports both at G10 on the BAS.

Keep the right paperwork

To support a GST claim, keep the tax invoice from the seller, the finance contract, and your logbook or other evidence of business use. If the vehicle is leased, keep the lease schedule showing GST in each payment.

Timing your claim

Claim the GST credit on the BAS for the period in which you hold a valid tax invoice and the purchase is made, following your accounting basis. If you’re unsure which period applies, ask your bookkeeper before lodging.

Getting finance with GST in mind

Choosing between buying and leasing, or between a dealer and a private seller, often comes down to GST timing and cash flow as much as anything else. The business vehicle finance planner shows how GST status changes the usual options. When you’re ready, check what your business could qualify for.

Asking won’t trigger a credit check. Your details stay with one specialist rather than being circulated, and a real person calls you to talk through the vehicle, the seller and your GST position. Accurate answers on the form — especially whether you’re registered for GST and who’s selling — help us recommend the right structure first time. Send your enquiry.