Purchase and Sale of Motor Vehicles

You may claim the GST incurred on the purchase of a motor vehicle if it is not disallowed under the GST law. You need to account for GST when you sell the motor vehicle even if you are not entitled to claim input tax for the purchase.

Claiming Input Tax for Purchase

Motor car

The cost and running expenses of a motor car (except for Q-plated cars with COE issued before 1 Apr 1998) are disallowed expenses under Regulation 27 of the GST (General) Regulations. Hence, the GST incurred on the purchase and running expenses (e.g. petrol and parking expenses) of a motor car is not claimable.

Other motor vehicles

For other motor vehicles (e.g. lorry, van and motorcycle) that do not fall under the definition of a 'motor car', the GST incurred for the purchase and running expenses of the motor vehicles are claimable, subject to the  conditions for input tax claim.

Charging Output Tax for Sale

If you are not a motor vehicle dealer, you should use the Discounted Sale Price Scheme when you occasionally sell a vehicle that you have used in your business.

Under this scheme, you are required to charge GST on 50% of the selling price when you sell the used vehicle.

You sold a motor vehicle at $25,000 (excluding GST).

GST chargeable = $25,000 x 7% x 50% = $875

GST reporting
Box 1 (Value of standard-rated supply): $25,000
Box 6 (Output tax due): $875

You sold a motor vehicle at $25,875 (inclusive of GST).

GST chargeable = $25,875 x 7/207 = $875

GST reporting
Box 1 (Value of standard-rated supply): $25,000 (i.e. $25,875 - $875)
Box 6 (Output tax due): $875

  • I did not claim GST on my company vehicle as the input tax is disallowed. Do I need to charge GST on the sale of my company vehicle if I am not a motor car dealer?

    Yes, you are required to charge GST on the sale of your company vehicle even though you did not claim GST on the purchase of the vehicle. 

    You should use the Discounted Sale Price Scheme and charge GST on 50% of the selling price of the used vehicle.

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