Claiming GST on motor vehicle expense
Scenario:
I am a sole trader. I wish to claim GST credits on some business lunches. As I am not an employee, the fringe benefits tax (FBT) regime for entertainment does not apply. Assuming the lunches were business-related, can I claim the GST credits? I want to claim GST on motor vehicle expenses, is it permissible (using the cents per kilometre method for tax purposes)?
Explanation:
According to GST Act s 69-5 (3)(f), Input tax credits are prohibited for acquisitions that are entertainment expenditure.
Input tax credits are available for creditable acquisitions. So, to claim input tax credits, you would need to establish the business percentage of use of the vehicle (using a logbook). There is no effect by using the cents per kilometre method.