Verified for 2026 Tax Year

GST on Motor Vehicles

Buying a work ute or company car? Learn how to maximize your input tax claim, manage logbooks, and navigate the tricky Fringe Benefit Tax (FBT) crossover.

The 10-Second Rule

How you claim GST on a motor vehicle depends entirely on your business structure. **Companies** claim 100% upfront but face ongoing FBT. **Sole Traders & Partnerships** claim a percentage based strictly on a 90-day logbook test.

1. Business Structure Dictates the Rules

Before you calculate anything, you need to know which set of Inland Revenue Department rules apply to you.

Sole Traders / Partnerships

APPORTIONMENT REQUIRED

You cannot claim 100% unless you literally never use the car for personal trips. You must maintain a logbook for 90 days to determine your "business use percentage" and claim GST only on that portion.

Registered Companies

100% CLAIM + FBT

The company claims 100% of the GST on the purchase price and running costs. However, if the car is *available* for private use by employees/shareholders, the company must pay Fringe Benefit Tax (FBT).

2. The Sole Trader Logbook

If you are a sole trader, your input tax deduction is capped by your logbook. The logbook must track all trips (distance, date, and reason) for a minimum of 90 consecutive days. This establishes a baseline percentage that you can use for the next three years (provided your use doesn't change by more than 20%).

Example: The Electrician's Ute

An electrician (sole trader) buys a ute for $46,000 (including $6,000 GST). His 90-day logbook shows he uses it 80% for his taxable activity and 20% for weekend fishing.

Purchase GST Claim: $6,000 × 80% = $4,800.
Running Costs: He claims 80% of the GST on fuel, repairs, and WOFs.

3. Buying from Private Sellers (TradeMe)

You don't need a tax invoice to claim GST if you buy a vehicle from a non-registered private seller. You can claim a Second-Hand Goods Credit equal to 3/23 of the total purchase price.

Documentation Required:

You must keep a record of the seller's name, address, date of purchase, description of the vehicle, and the amount paid. A printed TradeMe receipt and bank statement usually suffices.

4. Selling the Vehicle

If you claimed any GST on the purchase or running costs of the vehicle, it is considered part of your taxable activity. Therefore, when you sell the vehicle, you must charge and return GST on the sale price.

Watch Out: The Trade-in Trap

When you trade in a business vehicle at a dealership, the dealer will often show a "changeover" price. However, for GST purposes, you are *selling* your old car to them (you owe output tax) and *buying* a new car (you claim input tax). You must report both the gross sale and gross purchase in your GST return, not just the net difference.

Frequently Asked Questions

Can I claim 100% of the GST on a new work vehicle?

If it is a company-owned vehicle and available for private use, you claim 100% upfront but must pay FBT. If you are a sole trader, you must apportion the GST claim based on a 90-day vehicle logbook.

Do I have to charge GST when I sell my business car?

Yes. If you claimed GST when you bought the vehicle, you must charge GST on the sale price when you dispose of it.

Can I claim GST on a car bought from a private seller on TradeMe?

Yes, you can claim a 'Second-Hand Goods Credit' equal to 3/23 of the purchase price, provided you keep a record of the seller's details and the transaction.

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