If you're registered for GST, you can generally claim 1/11 of a business vehicle's price as a GST credit, but for cars the credit is capped at 1/11 of the car limit, which is $69,883 for vehicles first used or leased in 2026–27, making the maximum credit $6,353. Whatever the cap allows is then reduced by your private-use percentage. Vehicles designed to carry one tonne or more (or nine or more passengers) aren't cars, so utes, vans and trucks with real payload escape the cap and the full 1/11 is claimable.
Register for GST →5-minute form · usually done in 4 business hours
The basic claim: four boxes to tick.
A vehicle follows the same rules as every other GST credit, just with bigger numbers. You can claim when all four hold: you're registered for GST at the time of purchase; the vehicle is for use in your business; the price actually included GST, which means the seller was registered, so a dealer yes, a private seller almost never; and you hold a tax invoice, required for any claim over $82.50. The claim goes on the BAS for the period you bought the vehicle, at label 1B like any other credit: a capital purchase this size also gets reported at G10. Miss the period? Credits stay claimable for four years, so a forgotten vehicle is one of the better reasons to revisit an old BAS.
The car limit: $69,883 for 2026–27.
Cars get a ceiling. If a car costs more than the car limit, your GST credit is worked out on the limit instead of the price:
| The rule | How it works |
|---|---|
| The limit | $69,883 for cars first used or leased in the 2026–27 financial year: indexed most years, so check the current figure before you claim |
| Maximum credit | 1/11 × $69,883 = $6,353: the most GST you can claim on a car, no matter what it cost |
| Which year's limit? | The year you first use or lease the car, not the year you ordered or paid the deposit |
| Under the limit | No cap in play: claim 1/11 of the actual price, apportioned for private use |
| Luxury car tax | No credit at all for any LCT in the price (LCT starts above $80,809, or $91,661 for fuel-efficient cars, in 2026–27) |
Worked example: an $88,000 car used 100% for business in 2026–27. The raw GST in the price is $8,000, but the claim is capped at $6,353. The other $1,647 is simply gone. The same limit caps the depreciation deduction on the income tax side, which is why the last dollars of an expensive car buy far less tax benefit than the first.
What counts as a "car": the one-tonne rule.
The cap only applies to a car: a vehicle designed to carry a load of less than one tonne and fewer than nine passengers. Get outside that definition and the limit disappears: a truck, a load-rated van, a nine-plus-seat minibus or a genuine one-tonne ute can claim the full 1/11 of its price however much it costs, still apportioned for any private use. The test is the vehicle's designed payload, not its shape or its badge: many single-cab and some dual-cab utes are rated at a tonne or more and escape the cap, while plenty of popular dual-cabs carry less than a tonne and are cars for this rule. For a tradie choosing between two similar utes, that payload figure on the compliance plate can be worth thousands in GST: check it before you sign, not after.
Private use: you claim the business share only.
Almost no small-business vehicle is 100% business, and the ATO knows it. Your credit (after the car limit, if it applies) is reduced to your business-use percentage. A $44,000 car ($4,000 GST) used 60% for business gives a $2,400 credit. The evidence that holds up is a logbook: 12 continuous weeks of trips establishing the percentage, refreshed when your pattern changes. Commuting from home to your regular workplace is private use, not business. And the percentage isn't set-and-forget: if your actual use turns out materially different from the estimate you claimed on, you make an adjustment on a later BAS, in either direction. Keep the logbook and the purchase paperwork for the full five years.
Second-hand vehicles and private sellers.
The credit depends on GST actually being in the price. A GST-registered dealer charges GST on new and used stock alike, so a second-hand car from a dealer is claimable under the normal rules. A private seller isn't registered, charges no GST, and leaves you nothing to claim: a $33,000 private sale contains no GST, while the same car at $33,000 from a dealer contains $3,000 you may get back. Price that difference in before assuming the private sale is cheaper. Auction houses and demo models follow the seller's registration, and if in doubt you can check any seller's GST status free by ABN.
Financed vehicles: who owns it decides the timing.
How you pay changes when the credit lands, not whether it exists. Under a chattel mortgage or car loan the vehicle is yours from delivery day, so you claim the full GST credit in that BAS period: upfront, even if you account for GST on a cash basis and the lender's money paid for it. Hire purchase agreements (entered into since July 2012) work the same way. Under a lease the financier owns the vehicle and you're paying to use it, so there's no upfront claim. You claim the GST inside each lease payment as it's made, spread across the term. Same car, same GST, different quarters.
Selling or trading in: the sting in the tail.
The rules run both ways. Dispose of a vehicle you've used in your GST-registered business and that's a taxable sale: you owe 1/11 of the full sale price at label 1A, even when the buyer is a private individual, and a trade-in is a sale: the trade-in value on the dealer's paperwork is the price you owe GST on, separate from the GST you claim on the replacement. The part that surprises people: the car limit doesn't work in reverse. A car that cost $110,000 gave you at most a $6,353 credit going in, but sell it for $66,000 later and you owe the full $6,000 going out. Wound the business up instead? A vehicle kept when you cancel your GST registration can trigger a similar adjustment on the final BAS.
Quick answers.
Can I claim the GST back on a car I buy for my business?
Yes, if you're registered for GST, the seller charged GST, you hold a tax invoice and the vehicle is used in your business. The credit is 1/11 of the price, reduced by your private-use percentage, and for cars it's capped at 1/11 of the car limit, which is $69,883 for 2026–27, making the maximum claimable credit $6,353 even on a more expensive car.
What is the car limit for GST in 2026–27?
The car limit for vehicles first used or leased in the 2026–27 financial year is $69,883, and the maximum GST credit on a car is 1/11 of that: $6,353. The limit is indexed most years, and the year that matters is the year you first use or lease the vehicle, not the year you ordered it.
Does the car limit apply to utes, vans and trucks?
Only vehicles that are "cars" (designed to carry less than one tonne and fewer than nine passengers) are capped. A vehicle built to carry one tonne or more (most trucks, many single-cab utes and load-rated vans) or nine or more passengers isn't a car, so the full 1/11 of its price is claimable, apportioned for any private use. Check the payload rating, not the badge, plenty of popular dual-cab utes carry less than a tonne and are cars for this rule.
How does private use affect the GST claim on a vehicle?
You can only claim the business-use share. Work out the percentage the vehicle is used for business (a logbook is the evidence the ATO expects) and claim that share of the GST, after applying the car limit if it's a car. A $44,000 car used 60% for business gives a credit of $4,000 × 60% = $2,400. If your actual use later turns out materially different from your estimate, you adjust it on a later BAS.
Can I claim GST on a second-hand car bought from a private seller?
Generally no. A private seller isn't registered for GST, so there's no GST in the price and nothing to claim. Buy the same car from a GST-registered dealer and the price includes GST, which you can claim under the normal rules. That difference is worth pricing in when a private sale only looks cheaper.
How is GST claimed on a financed or leased vehicle?
It depends on who owns the vehicle. Under a chattel mortgage or car loan you own it from day one, so you claim the full GST credit on the purchase price in the BAS period you take delivery, even if you account for GST on a cash basis. Under a lease the financier owns it and you're paying to use it, so you claim the GST inside each lease payment as you make it, spread over the term.
Do I pay GST when I sell or trade in a business vehicle?
Yes. Selling or trading in a vehicle you used in your GST-registered business is a taxable sale. You owe 1/11 of the full sale or trade-in price on your BAS, even when the buyer is a private individual and even if the car limit capped the credit you claimed when you bought it. If you'd rather not deal with any of this, our BAS agent registration service is $119 + GST, reviewed and lodged for you.
Related guides: How GST credits work · GST for tradies · Tax invoice requirements · GST record-keeping · Cash vs accrual GST · Fixing BAS mistakes · GST on insurance · GST on agency and consignment sales
Buying the vehicle? Get registered first. ~4 business hours.
Reviewed and lodged by Registered BAS Agent 25972850 · $119 + GST, tax deductible · backdating up to 4 years +$25 + GST · free help on 1800 546 526.