If your business is GST-registered and you buy a vehicle or equipment to use in that business, you can generally claim back the GST in the taxable period the purchase falls in. The claim is 3/23 of the GST-inclusive price. Where the asset is also used privately, you claim only the business-use share.
The details below cover when you can claim, how much, and the thing most people get wrong: the finance structure you choose changes when the GST comes back to you.
Three things have to be true before you can claim anything
1. You are GST-registered. No registration, no claim. Registration is compulsory once turnover passes the threshold and voluntary below it, and a business about to spend six figures on plant is one of the situations where voluntary registration is worth a conversation.
2. The purchase is a taxable supply and you have the records. The seller has to be charging GST, and you need taxable supply information to support the claim: who sold it, what it was, when, and how much GST. A handwritten note on the back of an envelope will not survive a review.
3. The asset is used to make taxable supplies. Put plainly, it has to be used in the business. An asset used entirely for private purposes gets no claim. An asset used partly for each gets a partial claim, which is the next section.
If all three hold, the GST comes back as an input tax credit in your next return.
How much you can actually claim
GST in New Zealand is 15%, but it is easiest to work backwards from the price on the invoice. The GST inside a GST-inclusive price is 3/23 of that price, not 15% of it. Taking 15% off the top is the most common arithmetic error in this whole area.
| GST-inclusive price | GST content (3/23) | GST-exclusive cost |
|---|---|---|
| $34,500 | $4,500 | $30,000 |
| $69,000 | $9,000 | $60,000 |
| $172,500 | $22,500 | $150,000 |
When the asset is used privately as well
You claim the business-use proportion. Work out a fair and reasonable estimate of taxable use at the time you acquire the asset, claim that share, and keep the basis for the estimate.
Say you buy a $69,000 ute with $9,000 of GST in it, and it is used 80% for the business and 20% privately:
- Claimable now: $9,000 × 80% = $7,200
- Not claimable: $1,800
If actual use turns out materially different from the estimate, adjustments may be required in later periods. For a vehicle that is genuinely close to full business use, a logbook is the cleanest evidence you can have.
Do not forget the other end
If you claimed GST when you bought a business asset, you must return GST when you sell it. Businesses that trade plant or vehicles every few years sometimes budget for the claim and forget the output tax on disposal.
Vehicles: where it gets complicated
Equipment is usually simple. It lives at the yard, it does one job, the claim is the whole amount. Vehicles are where most of the queries come from, because vehicles go home at night.
The GST question is not what the vehicle looks like. It is what proportion of its use is for making taxable supplies. A signwritten ute that does the school run is not fully claimable, and an unmarked sedan that only ever visits job sites may be.
That said, the practical picture differs by vehicle type:
| Vehicle | Typical position |
|---|---|
| Truck, van, dedicated work vehicle | Usually close to 100% business use. Full or near-full claim. |
| Double-cab ute | Often high business use with some private. Apportioned claim, and worth a logbook. |
| Company car available to a director or staff member | Private use is normal, so expect a meaningful reduction. |
A word on the overlap people trip over: GST and fringe benefit tax are separate regimes with separate tests. A vehicle can be fully claimable for GST and still create an FBT liability, or qualify for an FBT exemption and still need its GST claim apportioned. Do not assume a decision in one carries across to the other.
And a warning for anyone reading Australian material: Australia caps the GST claim on passenger cars at a set limit. New Zealand does not work that way. Our system apportions by use, with no equivalent cap.
The bit almost nobody mentions: your finance structure changes the timing
Two businesses buy the same $172,500 machine with $22,500 of GST in it. One signs a hire purchase agreement, the other an operating lease. They get the GST back on completely different timetables.
Hire purchase: the whole claim, up front
Under a hire purchase agreement the time of supply is the date the agreement is entered into. You claim the GST on the full cash price in that taxable period, even though you have paid almost none of it.
The part that surprises people: this applies whatever accounting basis you are on, including the payments basis. Normally a payments-basis taxpayer claims GST as they pay. Hire purchase is carved out. Sign in March and the full $22,500 is claimable in your March period.
The finance charge, the difference between the cash price and what you end up repaying, is an exempt financial service. There is no GST in it, so there is nothing further to claim as you make the repayments.
Leases and agreements to hire: claim as you go
With an agreement to hire, each payment is its own supply. You claim the GST on each instalment as it falls due or is paid. The same $22,500 comes back to you in slices across the term instead of in one period.
| Hire purchase | Agreement to hire / lease | |
|---|---|---|
| When GST is claimable | In full, in the period the agreement is signed | On each payment, across the term |
| Basis of the claim | The cash price of the goods | Each instalment |
| Finance charge | Exempt, no GST | n/a |
| Cash flow effect | A large one-off refund early | Spread evenly |
For a business buying a six-figure asset, that difference is real money at a real moment. A $22,500 GST refund landing in the period you take delivery is working capital at exactly the point most businesses are stretched. It is worth knowing before you choose a structure rather than after.
Buying privately or from someone who is not registered
Plenty of good used plant is sold by people who are not GST-registered. There is no GST on that invoice, so on the face of it there is nothing to claim.
The second-hand goods rules can change that. Where a GST-registered business buys second-hand goods from a non-registered seller, it may be able to claim a credit for the GST content of the price even though no GST was charged, provided the conditions are met. The goods generally need to be situated in New Zealand, the purchase has to be for making taxable supplies, and you need records showing who you bought from, what, when and for how much.
Two cautions:
- Buying from an associated person (a related company, a family member, your own trust) has its own rules and the claim can be restricted. Flag it with your accountant before you transact.
- Keep real records. A private sale with no invoice is exactly the transaction IRD will ask about. Get the seller’s name and address, a description, the date and the price, in writing.
Six mistakes that invite a query
- Taking 15% off the GST-inclusive price. The GST content is 3/23, which is about 13.04%. On a $172,500 machine the two methods differ by roughly $3,400.
- Claiming 100% on a vehicle that goes home. If there is private use, apportion it and be able to show how you arrived at the figure.
- Claiming the GST on the deposit only. On a hire purchase the claim is on the full cash price, in the period the agreement is signed.
- Claiming GST on the finance charge. There is none. Financial services are exempt.
- Forgetting output tax on disposal. Claim it on the way in, return it on the way out.
- No taxable supply information. The claim stands on the records. Keep them with the asset file, not in an inbox.
Common questions
Can I claim GST on a car purchase in New Zealand?
Yes, if you are GST-registered and the vehicle is used to make taxable supplies. The claim is the business-use proportion of the GST in the price. A vehicle used partly privately gets a partly reduced claim, and a vehicle used entirely privately gets none.
How much GST can I claim on a $69,000 vehicle?
The GST content is 3/23 of $69,000, which is $9,000. If the vehicle is 80% business use you claim $7,200. Full business use means the full $9,000.
Can I claim the GST straight away on a hire purchase?
Yes. The time of supply for a hire purchase agreement is the date the agreement is entered into, so the GST on the full cash price is claimable in that taxable period. This holds even if you account for GST on a payments basis.
Is there GST on the interest or finance charge?
No. Financial services are exempt from GST, so the finance charge on a hire purchase or loan carries no GST and there is nothing to claim on it.
Can I claim GST when I buy equipment from someone who is not GST-registered?
Possibly, under the second-hand goods rules, provided the conditions are met and you keep proper records of the purchase. Transactions with associated persons have additional restrictions.
Do I have to pay GST when I sell the asset?
If you claimed GST on the purchase and the asset is a business asset, yes. GST is returned on the sale price. Factor it into the figure you negotiate.
Is GST the same as fringe benefit tax on a work vehicle?
No. They are separate regimes with separate tests. A vehicle can be fully claimable for GST and still attract FBT, and the reverse. Work them out independently.
Decide the structure before you sign, not after
The GST claim on a vehicle or machine is mostly a matter of applying the rules. What is actually a decision is how you fund it, and that decision sets the timing of the refund, the shape of your repayments and your position at the end of the term.
We arrange finance across commercial vehicles, trucks, plant and equipment, and we will tell you plainly how each structure behaves, including the parts that are not in our interest to gloss over.
Have a look at commercial vehicle finance, or get in touch with the asset you are considering and we will work through the options.
A note on advice. GVK Finance are finance brokers, not accountants or tax agents. This article sets out how the GST rules work in general terms and is not tax advice. GST apportionment, second-hand goods claims and associated-person transactions all turn on your specific facts. Confirm your position with your accountant before filing.
