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 and 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.
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.
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).
Sole Trader Buying a Work Vehicle
Three things have to be true before you can claim GST on a vehicle.
| Step | What Inland Revenue requires |
|---|---|
| GST registration | You must be GST registered. An unregistered person does not claim input tax. Registration steps sit on how to register for GST in NZ. |
| Logbook | Inland Revenue’s use a logbook page says keep a logbook for at least 90 consecutive days. Record the start date and odometer, then the date, distance, and reason for each business journey, then the end date and odometer. Start that record when you buy the vehicle. |
| GST return | The claim is input tax in the GST return for the period that covers the purchase. It is not a separate refund form. If input tax is higher than the GST you charged that period, the return can leave a GST refund. |
If the vehicle is used for business and personal trips, Inland Revenue’s GST adjustments guidance treats vehicles as goods commonly used both ways. Claim GST only on the business use percentage. That mix is covered on GST on mixed use assets in NZ.
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%).
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.
GST Claim on a New Company Car
GST guide IR375 finds the GST in a GST inclusive price by multiplying by 3 and then dividing by 23. A registered company that buys a vehicle for the taxable activity claims that GST as input tax in the return covering the purchase. Private availability for employees or shareholders is then priced through fringe benefit tax, not by cutting the purchase claim. See FBT for employers.
A company pays $57,500 including GST for a new ute. Using the IR375 fraction, $57,500 times 3 divided by 23 is $7,500 of GST. The company claims that $7,500 as input tax. The same fraction applies to a GST inclusive running cost such as fuel, servicing, tyres, or insurance, to the extent the cost is used in the taxable activity.
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.
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.
Buying from a Dealer or a Private Seller
Buying from a GST registered dealer is the usual tax invoice path. The dealer charges GST and gives you taxable supply information. You claim the GST charged, to the extent the vehicle is used in your taxable activity. For a sole trader, the logbook business use percentage still caps that claim.
Buying from a private seller on Trade Me or Facebook Marketplace is different when the seller is not GST registered. Inland Revenue’s special supplies page says a GST registered buyer may be able to claim a secondhand goods credit when buying secondhand goods. If the seller is not registered, or the goods are private, no GST is charged. You must pay before you claim, and you must record the supplier’s name and address, the date, a description, the quantity, and the price paid. Inland Revenue’s associated person examples on that page calculate GST as the amount times 3 divided by 23. Check whether the seller is GST registered before you treat the buy as a secondhand goods credit. A registered seller of a business vehicle must charge GST and give you taxable supply information. The wider claim rules sit on claiming GST NZ.
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.
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.
GST When You Sell a Car Privately
The rate depends on the vehicle’s GST history, not on who buys it. Inland Revenue’s GST adjustments page lets a registered person elect to treat some land, dwellings, and vehicles as non taxable supplies when no past GST deduction was claimed for the goods, the goods were not acquired or used for the main purpose of making taxable supplies, and they were not acquired as zero rated supplies (with the stated exception). In that case you do not add GST to a future sale.
If you claimed GST when you bought the vehicle, or on capital improvements that make a future sale taxable, the vehicle sits in the taxable activity. You account for GST on the sale, whether you sell to a dealer, on Trade Me, or to a neighbour. Using the IR375 fraction, the GST in a GST inclusive sale price is the sale price times 3 divided by 23.
Frequently Asked Questions
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.
Yes. If you claimed GST when you bought the vehicle, you must charge GST on the sale price when you dispose of it.
Yes, you can claim a secondhand goods credit equal to 3/23 of the purchase price, provided you keep a record of the seller's details and the transaction.
Yes, where the insurer charged GST. Inland Revenue’s use a logbook page lists insurance with petrol, Warrant of Fitness, maintenance, repairs, and parking as vehicle costs to allocate by business use. Claim the GST on the business use share of the premium, the same way you claim fuel or repairs. Use the policy schedule or renewal notice that shows the GST. If you pay yearly, claim in the return covering that payment. If you pay monthly, claim each instalment when it falls due.
Claim GST only where GST was charged and you hold the records. Most vehicle services from GST registered businesses, such as mechanics, tyre shops, insurers, and Warrant of Fitness inspectors, charge 15% GST and show it on the invoice. Claim the business use share of that GST. Inland Revenue’s special supplies page says road user charges are claimed in the period when you pay New Zealand Transport Agency or one of their agents. For other government registration or licensing fees, check the receipt before you claim. If no GST was charged, there is nothing to claim for GST, though the amount may still matter for income tax.
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