Suitable for: Anyone registered for GST who uses their car for a business purpose
Tax Difficulty: Intermediate
Airtax Experience: Repeat users
Time to read: 5-8 minutes
In short: To answer the question “can I claim the cost of my Car Registration on my BAS” - it depends! Car registration is charged differently depending on the state you’re in, so it’s important you consider this when you complete your BAS form on Airtax. In this article, we’ll explain the things you need to check on your car registration tax invoice to determine if the expense is claimable, and along the way, we’ll link this back to the key conditions that need to be met in order to claim an expense on your BAS.
This article will help you decide whether or not you can claim car registration on your BAS, and also more generally show you how to apply the GST credit criteria to any expenses you’re unsure if you can claim.
To start, a quick reminder of the conditions an expense needs to meet in order for it to be claimable in your BAS (all must be true):
- The purchase is made at least partly for your business activity, and it does not relate to making input-taxed supplies.
- The expense amount included GST.
- You have paid for the expense during the BAS period
- You have a tax invoice from the seller, for purchases over $82.50 (inc. GST)
How we can apply the above criteria to Car Registration:
- Is the purchase made at least partly for your business activity? You need to register your vehicle in order to use it on our roads, so this question is actually asking whether or not you use your car for a business purpose. Some valid business purposes for a vehicle include rideshare driving, food delivery and courier services, to name a few. If this is true, you can proceed to the next question. If this does not apply to your vehicle, your car registration is not claimable on your BAS.
- Did the expense amount include GST? In order to claim GST back on a purchase through your BAS, the expense has to actually include GST. With respect to car registration, whether or not this expense actually has GST associated with it varies depending on what state you are living in. It is very important to consider this requirement when determining if your registration is claimable.
- Have you paid for the expense during the BAS period? Assuming you are registered to report BAS on a quarterly basis, you should list expenses in the BAS period in which you actually paid for them. For example, if you paid for your car registration on the 29th of October, you should include the entire claimable amount in the October - December BAS.
- Do you have a tax invoice from the seller? This one is normally an easy one, as the vehicle registration agency should provide you with a tax invoice via email or mail.
Ask yourself: does my car registration amount actually contain GST?
This is where things get slightly more difficult. GST is not charged on car registration the same way across all states, so it’s really important that you make this determination for yourself based on the tax invoice you have received. (If you have friends that report BAS in other states, don’t follow them blindly!)
Your car registration bill may be comprised of smaller line items, each of which has a different GST treatment.
For example, in Victoria, the total vehicle registration charge is broken up into three components:
- Registration Fee,
- TAC Charge, and
- Insurance Duty.
Generally, only the TAC charge line item includes GST, whereas the registration fee and Insurance Duty do not contain GST. Given the requirements necessary for an expense to be claimable, only the TAC Charge passes all 4 tests and should be included on the Airtax BAS.
Jackie owns her own courier business, and her ABN is registered for GST purposes. She lives in Victoria, and owns a car that is used to make deliveries as part of her business. She has determined through a logbook that she uses her car 80% of the time for a business purpose. Every December, Jackie pays car registration for this vehicle and receives the following Tax Invoice.
- Registration fee = $295.10
- TAC Fee = $474.00 (incl. GST)
- Insurance Duty $47.40
TOTAL COST = $816.50
Currently, Jackie is working on her October - December BAS and is wondering what amount, if any, she should list in her BAS for this expense. She refers to the four requirements for an expense to be claimable in the BAS:
1. Is the purchase made at least partly for your business activity? Yes, her car is used 80% of the time for a business purpose. Given car registration is necessary in order to use her car, this test is satisfied.
2. Did the expense amount include GST? Only the TAC Fee has GST associated with it - given by the (incl. GST) label. Therefore, this $474 amount is the only amount that passes this test. The other two line items fail this test, and should NOT be included on the BAS.
3. Have you paid for the expense during the BAS period? Jackie paid this amount in December, so she is correct in claiming this expense in the October - December BAS period.
4. Do you have a tax invoice from the seller? Yes, Jackie has the above Tax Invoice to prove this expense if she was ever asked.
Given the above, this is how Jackie would enter this expense on her Airtax BAS:
What you have learned:
- When you can and can’t claim an expense on your BAS
- Not to assume that the entire car registration bill is claimable for BAS purposes
- How to correctly list your car registration expense on the Airtax BAS