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GST for car expenses

Discussion in 'Accounting & Tax' started by bez23, 10th Jan, 2016.

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  1. bez23

    bez23 Well-Known Member

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    Hi guys,

    I use my car for business purposes (90%~). I know for yearly tax calculation, we approportion 90% for all expenses. However, when it comes to GST (BAS), do I claim the whole 100% or do 90% as well.

    Cheers
     
  2. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    1. Estimate the portion of your purchase you intend to use for private purposes and reduce the amount of GST credit you claim on your activity statement by this amount.
    2. If eligible, you can claim a GST credit on your activity statement for all the GST included in the purchase price and later make a single annual increasing adjustment to account for the private portion of all business purchases. This is called annual private apportionment.
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    And when the car is sold / traded-in there is also a adjustment made to reduce the GST on the sale. And it's not as simple as being 90%. Instead, the GST on the sale is reduced by the amount of the GST that was not claimed (ie 10%) on the original acquisition. This can often see the GST being paid as far less that 90% of the trade in / sales value. GST only applies to the extent a item is creditable. ... Private use discounts the GST in all cases.

    Its very important that a logbook is available that confirms the 90%. Not a guestimate. For the 2016 year the logbook method and the cents per Km are the only methods.
     
  4. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    Is fringe benefits tax (FBT) being paid in respect of the personal use of the car? It sounds like it isn't, but if it was, you may be able to claim 100% of the GST.
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The FBT formula includes a clawback for costs where GST was claimed (or not claimed at a lesser gross up rate) so claiming it doesn't increase any benefits. And any private use adjustment charged to a director to minimise FBT adds to GST on taxable supplies the company makes and company profit.