We often get asked about GST on vehicle finance and what it means for managing the repayments in your accounting software. 

The short answer is that it depends upon how the car was financed. Generally, it will be subject to a Chattel Mortgage or it will be a Lease. 

With a Chattel Mortgage, you're essentially buying the vehicle outright (with finance), becoming the legal owner right from the start. The GST component is paid and claimed upfront at the time of purchase, not spread across your repayments.

That means that there is NO GST on the repayments.

If you finance the purchase through a Lease, that's a different story altogether. With a lease, you're essentially renting the vehicle from the finance company - they remain the legal owner. In this case, there IS GST included in each of your lease payments because each payment is considered a taxable supply.

This means when recording your lease payments, you'll need to separate the GST component in your bookkeeping, allowing you to claim this GST credit on your BAS returns.

If you're not sure which financing method you have or need help with the GST implications then reach out to our team at Bee Group Accountants and chat with your Client Manager.