Entitled to 10% GST refund when purchasing a motor vehicle

You’re generally entitled to claim a GST credit for the GST included in the vehicle price, provided you have a tax invoice, and:

• you use a motor vehicle solely in carrying on your business

• you're registered for GST.

You must include the amount you paid for the motor vehicle at label G10 (capital purchases) on your activity statement.

Claiming GST credits – vehicle used partially for business

If you use a motor vehicle partly in carrying on your business, you’re generally entitled to claim a partial GST credit based on how much you use the motor vehicle in carrying on your business.

You must include only the proportion of the cost of the motor vehicle that relates to business use at label G10 on your activity statement.

Purchasing a car for more than the car limit

Special rules apply for cars with a value exceeding the car limit. The car limit is used to calculate depreciation deductions under the income tax law. More information is available to help you work out your car cost limit for depreciation.

Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of that limit. For 2025–26, the maximum GST credit you can claim is $6,334 (that is, 1/11 × $69,674). This limit also applies to cars which are fuel efficient.

If you purchase a car with a price that is more than the car limit, you include only the amount of the car limit (or the proportion of the car limit relating to business use) at label G10.

Example: purchasing a new car for the business

Darren purchases a new non fuel-efficient car for $91,315 (including $8,091 GST and $2,480 luxury car tax) on 12 July 2025. Darren plans to use the car 100% in carrying on his business. As the car limit for the 2025–26 financial year is $69,674, the maximum GST credit Darren can claim is $6,334 (1/11 × $69,674).

Darren reports $69,674 at label G10 on his activity statement and includes a GST credit of $6,334 at label 1B.

If Darren planned to use the car only 50% in carrying on his business, he would report $34,837 at label G10 and include a GST credit of $3,167 (50% of $6,334) at label 1B.

Darren cannot claim a credit for the luxury car tax paid on the car.

Source: ATO