Overview: the core GST rule
If you are registered for GST and the forklift is used in your business (a “creditable purpose”), you can usually claim input tax credits for the GST you pay. How and when you claim depends on the finance structure you choose.
- Chattel mortgage or hire purchase: claim the full GST on the purchase price upfront (with a valid tax invoice), then no GST on repayments.
- Finance lease or operating lease: pay GST on each rental and claim credits throughout the term; the residual (if any) also includes GST.
- Mixed use: apportion your claim to the business-use percentage.
How GST works by finance structure
1) Chattel mortgage
- Supplier charges GST on the forklift’s purchase price.
- You can generally claim the full GST input tax credit in your next BAS when you receive a valid tax invoice (subject to business use and holding a tax invoice).
- Repayments (including any balloon) are principal and interest only — no GST applies to those repayments.
2) Hire purchase (post 1 July 2012)
- Works similarly to a chattel mortgage for GST purposes.
- Full GST credit is typically claimable upfront when the asset is acquired and a valid tax invoice is held — even if you report on a cash basis.
- Interest is input taxed (no GST on interest).
3) Finance lease
- Each lease rental includes GST; claim credits as you make payments.
- The residual/final payment will also include GST and is claimable when paid (to the creditable-use extent).
- You don’t claim the full GST upfront under a finance lease.
4) Operating lease/rental
- Each rental invoice includes GST; claim credits per invoice/BAS.
- There is no ownership of the asset during the term, so there is no upfront GST claim on the full asset price.
BAS timing and accounting method
- Cash vs accrual: Under chattel mortgage/hire purchase (post 1 July 2012), you can usually claim the full GST upfront when the asset is acquired and a valid tax invoice is held, even if you report on a cash basis. Under leases, you generally claim credits as each GST-inclusive rental is paid or invoiced (depending on your method).
- Valid tax invoice: Keep the supplier tax invoice showing GST, plus the finance agreement.
- Apportionment: If the forklift has any private use, reduce the claim accordingly and keep reasonable records of business use.
Deposits, trade-ins, balloons and residuals
- Deposits: Deposits are typically part of the consideration and subject to GST by the supplier. For chattel mortgage/hire purchase, you still generally claim the full GST upfront (not just on the deposit) when the asset is acquired.
- Trade-ins: Trading in to a GST-registered dealer is usually a taxable supply. GST consequences can impact your net changeover and BAS.
- Balloons (chattel mortgage): Balloon payments are loan principal — no GST on the repayment itself.
- Residuals (finance lease): Residual payments include GST; claim the credit when paid (subject to business use).
New vs used forklifts and private purchases
- Dealer purchase (GST-registered): Tax invoice shows GST — claimable to the extent of business use.
- Private seller (not registered for GST): No GST charged — no input tax credit available.
- Imports: Import GST is generally claimable if you’re registered and the forklift is used in your business. The deferred GST scheme may help with cash flow if you qualify.
Worked examples
Assume business use is 100% and you hold a valid tax invoice. Figures are illustrative only.
Example A: Chattel mortgage
- Forklift price: $55,000 (inc. $5,000 GST).
- BAS: Claim $5,000 input tax credit upfront.
- Repayments: No GST on repayments (principal/interest only).
Example B: Finance lease
- Monthly rental: $1,100 inc. $100 GST → claim $100 each BAS period when paid.
- Residual at end: $11,000 inc. $1,000 GST → claim $1,000 when paid.
Common mistakes to avoid
- Claiming full GST upfront on a finance lease (you generally can’t).
- Claiming GST on private purchases where no GST was charged.
- Forgetting to apportion for any private use.
- Not retaining a valid tax invoice and finance agreement.
- Confusing GST claims with income tax deductions (depreciation/instant write‑off are separate income tax rules).
Quick checklist before you choose a structure
- Are you registered for GST and will the forklift be used for a creditable purpose?
- Do you want the full GST credit upfront (chattel mortgage/hire purchase) or prefer to spread credits over time (lease)?
- Any private use requiring apportionment?
- Buying from a GST-registered dealer or private seller?
- Will there be a deposit, trade‑in, balloon or residual?
- Do you have the tax invoice and documentation you’ll need for your BAS?
Get help with forklift finance GST
Have a scenario to sanity‑check or need help comparing GST outcomes for chattel mortgage vs lease? Ask below and we’ll respond with clear, practical steps.
Frequently asked questions
How does GST apply to a forklift bought with a chattel mortgage?
The supplier charges GST on the purchase price. If you’re registered for GST and the forklift is used in your business, you can usually claim the full input tax credit in your next BAS when you hold a valid tax invoice. Repayments (including any balloon) have no GST because they’re principal and interest.
How does GST work on a finance lease for a forklift?
Each lease repayment includes GST, which you can claim on each BAS. The residual at the end of the lease also includes GST and is claimable then.
Can I claim GST if I buy from a private seller?
No. If no GST is charged (for example, a private seller who isn’t registered for GST), there’s no input tax credit to claim.
What if I’m on cash basis for GST?
Under chattel mortgage and hire purchase agreements entered into after 1 July 2012, cash‑basis taxpayers can generally claim the full GST credit upfront when the asset is acquired and a valid tax invoice is held. For leases, you typically claim credits as rentals are paid.
Do I need to apportion for private use?
Yes. If the forklift has any private or non‑business use, reduce your input tax credit to the business‑use percentage and keep reasonable records to support it.
Is there GST on balloons and residuals?
Chattel mortgage balloons are loan principal with no GST. Finance lease residuals include GST, which you can claim when you pay the residual (subject to creditable use).
Final takeaway
The GST outcome for a forklift depends mainly on the finance structure and your business use. Chattel mortgage and hire purchase usually allow an upfront GST claim; leases spread GST (and credits) over the term. Keep valid tax invoices, apportion correctly, and separate GST rules from income‑tax deductions.
If you’re choosing between structures, compare the GST timing with cash flow, ownership goals and accounting method — then pick the option that fits your operation best.