GST and expenses am I entitled to claim on my vehicle

One of the questions I was recently asked via my newsletter subscription;

“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



As you are intending to claim the GST on the vehicle you will need to substantiate all your expenses, so all the receipts and logs will need to be accounted for.

A log book will need to be kept for 12 weeks to show the business use of the vehicle, the details of the log book should contain;

  • 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 finishing 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 log book is relevant for 5 years unless the vehicle is changed or there is a change in the usage of the vehicle)

Once you have the log book completed then you can claim the percentage of the expense of the vehicle as per the amount calculated in the log book.

Less than 5000 km

Now if your annual kilometres are less than 5000, the are two options available to you. You can either claim the percentage as per your log book or claim the percentage as per the ATO GST Bulletin GSTB 2006/1

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

If your anticipate kilometres travelled is between 2501 and 3750 then you can claim 15% percent of the GST on your SUV, of course, if your log book shows a higher rate then that will be the amount to claim.

Greater than 5000 km

If the amount travelled is greater than 5000 km then your 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 the above expenses incorporate GST, depreciation and interest on finance, there is no GST. Regarding registration and insurance, please make sure you check the Tax Invoice to make sure you claim the correct GST as the stamp duty and Government charges do not attract GST.

Tax Return

At the time of writing this post there are now only two methods to claim a deduction for the Motor Vehicle, the log book method and cents per kilometre method. By keeping the above information you will be able to make a choice between two methods based on what will give you the best deduction.

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