Motor Vehicles Expenses

Claiming input tax on motor cars and related expenses

You generally cannot claim the GST incurred on the purchase and running expenses of motor cars, such as petrol and parking charges. This applies to most passenger cars that carry up to 7 passengers, excluding the driver, and weigh 3,000kg or less when empty.

Input tax claims on motor car expenses for cars used by you or your employees are disallowed under Regulation 27 of the GST (General) Regulations. Use of the motor car includes both:

• Physical use, such as when the motor car is driven by your staff or chauffeur to transport your company directors or business associates; and 
• Economic use, where the motor car is used to generate income or make supplies (e.g. a consultancy firm uses its motor car to transport its preferred clients for a fee).

This input tax restriction applies regardless of whether the motor car is used wholly or partly for business purposes, unless the car is excluded from the definition of a ‘motor car’ under Regulation 25(1).

Exceptions where input tax on motor car expenses may be claimed

Purchase of private hire car transportation services

From 1 Apr 2022, you can claim input tax on the purchase of services to transport passengers from point A to point B (pay-per-trip) in a chauffeured private hire car, if you meet the conditions for claiming input tax. Your purchases must be supported by valid tax invoices or simplified tax invoices with GST charged to you.

For example, for limousine services, you will need to keep an invoice from the GST-registered business showing that GST has been charged on the services.

Motor car used by a third party

From 1 Jan 2023, you can claim input tax on the cost and running expenses of a motor car used by a third party, if you meet the conditions for claiming input tax. A third party does not include you or your employees, or a connected person (as determined in  Para 3 of the Third Schedule of the GST Act).

Examples of third-party expenses that you may claim include parking fees when customers park at your premises, or repair costs for a customer's car damaged at your carpark.

Motor car used by a connected person

From 1 Jan 2023, where a motor car is used by a connected person (e.g. a subsidiary), GST incurred on the motor car expenses is generally not claimable. An exception applies only if you satisfy both of the following conditions, in addition to the conditions for claiming input tax:

1. You recover the motor car expenses from the connected person. Where you recover only a portion of the motor car expenses incurred, you can only claim input tax to the extent of the portion recovered; and
2. The recovery is not ancillary to any primary supply you make to them. To determine whether the recovery is considered as ancillary to a supply, refer to “GST: Guide on Reimbursement and Disbursement of Expenses” (PDF, 584KB).

Where the connected person is GST-registered, the input tax claim on the motor car expenses recovered by you is disallowed under Regulation 27.

Claiming input tax on other motor vehicles

You can claim input tax on the purchase and running expenses of other motor vehicles, such as lorries, vans and motorcycles, subject to the conditions for claiming input tax.  As these vehicles do not fall within the definition of a ‘motor car’, the input tax restriction under Regulation 27 does not apply.

Claiming input tax on motor cars and related expenses for specific businesses

If you provide car rental services

You can claim input tax on the purchase of cars when you add them to your rental fleet for letting on hire, subject to the conditions for claiming input tax. You must make your claim within 5 years from the end of the relevant GST accounting period.

If you provide chauffeured private hire car services

You can claim input tax on the purchase and running expenses of your chauffeured private hire cars (e.g. limousine) used to transport customers from point‑to‑point in Singapore. These vehicles are excluded from the definition of a ‘motor car’ under Regulation 25(1), and therefore input tax is not disallowed under Regulation 27. You must meet the conditions for claiming input tax and make your claim within 5 years from the end of the relevant GST accounting period.

If you are a private hire car driver

From 1 Jan 2023, if you are a sole proprietor who holds a Private Hire Car (PHC) Driver's Vocational Licence (PDVL) and provides chauffeured ride services via mobile applications or platforms operated by booking service operators, you may claim input tax on the running expenses of your PHC incurred in the course of providing chauffeured ride services for a fee. However, you cannot claim input tax on the purchase cost or private use of the PHC.

If you are a private hire car fleet operator

From 1 Jan 2023, if you are an individual operating a fleet of Private Hire Cars (PHC) with employed drivers, you may claim input tax on running expenses incurred in the course of providing the chauffeured ride services for a fee. You may also claim input tax on the purchase cost if all the following conditions are met:

• You maintain a minimum fleet of 3 PHCs
• You employ a minimum of 2 PHC drivers, in addition to yourself, to provide chauffeured ride services
• Your business is registered as a sole proprietorship with the Accounting and Corporate Regulatory Authority of Singapore (ACRA)

You must continue to account for GST at the prevailing tax fraction on the fees charged both before and on or after 1 Jan 2023.