Private ruling: GST - input tax credits
Date of advice: 26 May 2026
Published: 10 August 2026
Ruling period: DD MM 20YY to DD MM 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Are you entitled to claim an input tax credit (ITC) in relation to the purchase of a motor vehicle under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, you are entitled to claim an ITC in relation to the purchase of the motor vehicle subject to the car limit of $69,674 and reduced by the extent of private use of the motor vehicle.

Relevant facts and circumstances: You are registered for GST. You are a renewable energy consultancy and project development company operating across Australia and the Pacific region. xxxx (Person A) is your director, and xxxx (Person B) is one of your shareholders. You are a newly established company and, at the time of trying to acquire a motor vehicle for business purposes, you were not generating sufficient income to support a loan application under your name. As a result, a vehicle has been purchased jointly by Person A and Person B (collectively, the Owners) on xxxx, with the loan also secured jointly under their personal names. The Owners are spouses. You and the Owners entered into a Vehicle Reimbursement Agreement dated xxxx (Vehicle Reimbursement Agreement). The Vehicle Reimbursement Agreement explains the Owners purchased the Vehicle in their personal names and that the Company shall bear the full economic cost and obtain the full benefit of the Vehicle. Pursuant to this agreement the Company shall reimburse the Owners for the purchase price and associated costs. The Owners confirm that the Vehicle is used and will continue to be used exclusively (100%) in carrying on the business activities of the Company. All ongoing costs related to the Vehicle that are incurred for business purposes (including fuel, insurance, registration, servicing and repairs) shall be paid or reimbursed by the Company, proportionate to business use. Any private-use component shall be borne by the Owners personally. The Owners will be reimbursed as soon as the business receives its first revenue. The reimbursement will be made as a lump sum. The Owners confirm they will not claim any GST credit personally in respect of the Vehicle purchase.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 11-5 | A New Tax System (Goods and Services Tax) Act 1999 section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 section 11-20 | A New Tax System (Goods and Services Tax) Act 1999 section 111-5 | A New Tax System (Goods and Services Tax) Act 1999 section 111-10 | A New Tax System (Goods and Services Tax) Act 1999 section 111-25 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision: Summary: Section 11-20 of the GST Act provides that an entity is entitled to the ITCs for any creditable acquisition that it makes. Section 11-5 of the GST Act provides that an entity makes a creditable acquisition if: • the acquisition is solely or partly for a creditable purpose; • the supply of the thing is a taxable supply • consideration for the supply is provided; or a liability to provide consideration exists; and • the entity that makes the acquisition is registered or required to be registered for GST. Section 11-15 of the GST Act provides that a thing is acquired for a creditable purpose to the extent that it is acquired in carrying on an enterprise. However, it is not acquired for a creditable purpose to the extent that it is acquired for making input taxed supplies or the acquisition is of a private or domestic nature. In this case, the Owners purchased the motor vehicle. As such you do not make a creditable acquisition in accordance with section 11-5 of the GST Act. However section 111-5 of the GST Act allows an enterprise to claim ITCs for acquisitions made by employees of the enterprise who were then reimbursed for the acquisition. Relevantly section 111-5 states: | Detailed Reasoning - Creditable acquisitions relating to reimbursements: (1) If one or more of the following applies: (a) you reimburse an employee or agent for an expense he or she incurs that is related directly to his or her activities as your employee or agent; (ab) you reimburse an employee (whether or not you are the employee's employer) for an expense that the employee or the employee's * associate incurs, and the reimbursement constitutes an * expense payment benefit; (ac) you reimburse an associate of an employee (whether or not you are the employee's employer) for an expense that the associate or employee incurs, and the reimbursement constitutes an expense payment benefit; (b) you are a * company and you reimburse an * officer for an expense he or she incurs that is related directly to his or her activities as your officer; (c) you are a * partnership and you reimburse a partner for an expense he or she incurs that is related directly to his or her activities as a partner in the partnership; the reimbursement is treated as * consideration for an acquisition that you make from the employee, associate, agent, officer or partner. (2) The fact that the supply to you is not a * taxable supply does not stop the acquisition being a * creditable acquisition. (3) However, the acquisition is not a * creditable acquisition: (a) to the extent (if any) that: (i) the employee, * associate, agent, * officer or partner is entitled to an input tax credit for acquiring the thing acquired in incurring the expense; or (ii) the acquisition would not, because of Division 69, be a creditable acquisition if you made it; or ... *denotes a term defined in section 195-1 of the GST Act. The definition of "associate" has the meaning given by section 318 of the Income Tax Assessment Act 1936 and includes relatives or spouses for individuals. We therefore consider Person B an associate of Person A as their spouse. Pursuant to subparagraph 111-5(3)(a)(ii) of the GST Act, an acquisition is not a creditable acquisition to the extent the acquisition would not, because of Division 69, be a creditable acquisition if you made it. Section 69-10 provides you will only be entitled to claim 1/11th of the car limit for the 2025-26 financial year. Subsection 111-10(1) of the GST Act provides that, for a creditable acquisition where the consideration is a reimbursement to which section 111-5 applies, the input tax credit is worked out as 1/11 th of the amount of that reimbursement. However, pursuant to subsection 111-10(2) this will be reduced by the extent of private use of the vehicle. In this case, your reimbursement to the Owners satisfies subsection 111-5(1) of the GST Act such that the reimbursement is treated as consideration for an acquisition that you make from the Owners. The fact that the supply to you is not a taxable supply does not stop the acquisition being a creditable acquisition. Therefore, you are entitled to an ITC. The extent of the ITC you are entitled to claim for the acquisition of the motor vehicle is limited to 1/11 th of the car limit, which for the 2025-2026 financial year is $69,674. This ITC claim is then further reduced by the extent of private use of the motor vehicle.