You may buy a car by paying cash or by taking out a car loan. The implications of purchasing a car are different for GST and income tax purposes.
If you buy a car on which you pay GST (for example, if you purchase a car from a dealer who is registered for GST), you’re generally entitled to claim a GST credit on the full purchase price to the extent that you use your car for business purposes. Typically, getting to and from work does not count as a business purpose, however, driving to visit clients during the working day might count towards business purposes and taking passengers for ride-share purposes should also count as business purpose.
In your BAS you would need to input the amount paid for the car (inc. GST) and the business percentage that you intend to use it for business purposes.
If you buy a second-hand car from someone who is not registered for GST (for example, a private seller), you cannot claim a GST credit. This means you should answer “no” to the question “Did you purchase a car and pay GST?”
You can find out more about the GST implications of purchasing and leasing a car here.
Before claiming any expenses relating to the purchase or lease of a car you should read through the ATO advice and ensure you are claiming amounts correctly.
It is also important to note that if you claim GST on the purchase of your car you might also be liable to charge GST if you choose to sell the car down the track.
Income Tax Implications:
When you purchase a car for business purposes in a financial year it might be possible to claim the cost of the car or depreciation on the car in you annual income tax return.
If the car cost less than $20,000 and you are considered to be a small business it might be possible to claim the cost of the car outright, to the extent that you use it in your business. You can find out more about this here.
If the car cost greater than $20,000 it is possible that you might be able to claim depreciation on the cost of the car using the log book method for claiming car expenses which you can find out more about here.