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Motor vehicle deductions and GST
June 22, 2021
Michelle Thompson, CA, Head of Tax and Compliance
Chris Hickey, CA, Audit Manager
If you do business as a sole trader, partnership, and trust, and you know the proportion of time a motor vehicle is used to help earn business income, you can calculate what to claim for business costs and depreciation loss for the vehicle. You can calculate this for income tax and GST purposes.
As a GST-registered business, you can also claim back the GST charged on goods and services used in your taxable activity. You can claim the GST input tax on purchases of motor vehicles used for the business and you may be able to claim GST when you sell the vehicle.
You will need to make an initial estimate of how much the vehicle will be used to make taxable supplies (as against how much it will be used privately). And, as sometimes this proportion may change over time, you may need to adjust the proportion of business use over private use. This will affect your GST liability.
You need to keep good records and understand how the GST rules affect your calculations of what you can claim.
Michelle Thompson, CA
Head of Tax & Compliance, Lynch & Associates Limited
Chris Hickey, CA
Audit Manager, Lynch & Associates Limited