GST and expenses am I entitled to claim on my vehicle
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A question I was recently asked;

“Hello Geoff, I have a question about motor vehicle expense claims.

We are full-time cereal farmers, recently I purchased a new car for myself, a medium size SUV. I use this car to attend to all the farming matters that I need to do eg: mail, bills, banking, spare parts and repairs etc. as well as working on the farm myself and shifting operations from farm to farm and running meals around during peak times.

What percentage of the GST and the expenses am I entitled to claim on my vehicle?

Thank you


When claiming the Goods and Services Tax (GST) on a vehicle, it is important to ensure that all expenses are properly documented and accounted for. This includes keeping a log book, which should reflect the business use of the vehicle over a 12-week period. The logbook should include the following information:

  • when the logbook period begins and ends
  • the car’s odometer readings at the start and end of the logbook period
  • the total number of kilometres the car travelled during the logbook period
  • the business-use percentage for the logbook period
  • the number of kilometres travelled for each journey recorded in the logbook (if you made two or more journeys in a row on the same day, you can record them as a single journey). You will need to record the
    • start and finish dates of the journey
    • odometer readings at the start and end of the journey
    • kilometres travelled
    • reason for the journey.
  • the odometer readings at the start and end of each income year you use the logbook method. (The logbook is relevant for 5 years unless the vehicle is changed or there is a change in the usage of the vehicle)

Once the log book is complete, the claimed percentage of the vehicle’s expenses can be determined based on the calculations made in the log book.

Less than 5000 km

If the total annual business kilometres are less than 5000, there are two options available for claiming the GST credit. The first option is to use the log book, and the second option is to use the simplified method outlined by the Australian Tax Office’s (ATO) GST Bulletin GSTB 2006/1.

Estimated kilometres travelled for a creditable purpose for a yearThe assumed extent of creditable purpose
0 – 1,2505%
1,251 – 2,50010%
2,501 – 3,75015%
3,751 – 5,00020%

For business use of the vehicle with an annual distance travelled between 2501 and 3750 kilometres, it is possible to claim a GST credit of 15% on the total GST paid for operating expenses. However, if the logbook reflects a higher rate, that figure will be the amount eligible for a claim.

For annual business kilometres greater than 5000, the only option is to claim the percentage as per the log book.

Vehicle Expenses

You can claim the costs of running your vehicle. Typically these will be;

  • Fuel
  • Services
  • Repairs
  • Tyres
  • Insurance
  • Registration
  • Depreciation
  • Interest on finance
  • Accessories

Most of these expenses incorporate GST, except for depreciation and interest in finance. It is important to verify the tax invoice for registration and insurance to ensure the correct GST is claimed, as stamp duty and government charges do not attract GST.

Tax Return

At the time of writing this post, the two available methods for claiming a deduction for a motor vehicle are the logbook method and the cents per kilometre method which as of the 1st July 2022 was 78 cents per Kilometre. By keeping accurate records and utilizing the information provided, you can determine the best method for claiming the deduction in your tax return.

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