Quick answer
For most businesses, a simple asset refinance (replacing one loan with another without changing asset ownership) does not trigger GST. Loans and interest are input taxed financial supplies, so repayments do not include GST. Where GST can arise is when the refinance involves a sale of the asset (sale-and-leaseback or sale-and-hire-purchase-back), or where third‑party service fees include GST.
- Simple refinance (no change in ownership): no GST on repayments or interest; lender establishment fees usually GST‑free; broker fees generally include 10% GST.
- Sale-and-leaseback: you remit 1/11th GST on the sale; lease rentals include GST, claimable each BAS to your business‑use %.
- Sale-and-hire purchase back: GST is triggered at inception on the taxable value; repayments typically do not include ongoing GST.
- Vehicle input tax credits may be capped by the car limit; refinancing later does not create a new GST credit.
Overview: asset refinance and GST
Asset refinance replaces an existing facility with a new one to reduce repayments, change terms, release equity or consolidate debt. The GST position depends on whether ownership changes and which finance product you use next. This page focuses on asset refinance GST in Australia and complements our explainer on how asset refinance works.
If your transaction is purely a payout and replace (no transfer of title), GST rarely appears beyond any taxable service fees. If the refinance is structured as a sale to the financier and a new lease or hire purchase back, a taxable sale occurs and GST must be managed on the sale and the new facility.
When refinancing does not trigger GST
A “like-for-like” refinance generally involves:
- Payout to your current lender (loan is extinguished).
- New loan over the same asset (no transfer of title to the financier).
GST implications in this case:
- No GST on the new loan amount, repayments or interest (input taxed financial supplies).
- Lender application/establishment fees are commonly input taxed (no GST), but check your contract.
- Broker service/advice fees usually include 10% GST, claimable to your business‑use percentage.
- No new input tax credit on the asset because there is no new purchase.
- Continue Division 129 adjustments on prior claims if business use changes over time.
If you are refinancing a balloon/residual only, the same logic applies: the refinance itself is not subject to GST, and repayments remain GST‑free (aside from any taxable service fees).
When GST applies in asset refinance
GST becomes relevant when the refinance involves a sale to a financier and then a new facility. Common structures:
1) Sale-and-leaseback
- You sell the asset to the financier for an agreed price.
- If you are GST‑registered and the asset is used in your enterprise, the sale is a taxable supply — you remit 1/11th of the sale price as GST on your BAS.
- You lease the asset back. Each lease rental includes 10% GST, claimable to your business‑use percentage.
2) Sale-and-hire purchase back
- GST is triggered upfront at inception on the taxable value of the supply.
- Repayments typically do not include ongoing GST (interest and principal are not subject to GST), but establishment or documentation fees from third parties may include GST.
3) Switching products without a sale
- If you switch from, say, a chattel mortgage to another loan product without a sale, there is no GST on the refinance itself.
- However, switching to a finance lease normally requires the financier to own the asset, which is achieved via a taxable sale (see sale-and-leaseback).
Note: Government charges do not include GST. Early termination or payout amounts to your outgoing lender are part of a financial supply and typically do not include GST.
Vehicle-specific rules and caps
- Cars subject to the car limit: input tax credits are capped at 1/11th of the car limit in the year of acquisition. Refinancing later does not create a new GST credit and does not lift the original cap.
- Luxury Car Tax does not create additional GST credits.
- Commercial vehicles not subject to the car limit follow normal rules (apportion for business use).
If you are unsure whether your vehicle is a “car” for GST purposes or subject to the limit, seek advice before changing structures.
BAS timing, apportionment and records
- Simple refinance: generally nothing to report for GST except any taxable broker fees (report at G11; claim at 1B to your business‑use %).
- Sale-and-leaseback: report GST on the sale price at 1A in the period the sale occurs; claim GST on lease rentals at 1B each period.
- Business-use apportionment: claim only the business‑use portion; monitor Division 129 adjustments if your usage changes.
- Keep: refinance contracts, payout letters, tax invoices for any broker fees, and lease schedules showing GST on rentals.
Worked examples
Example 1 — Simple refinance (no GST)
You refinance an $80,000 excavator loan to reduce repayments. The new loan replaces the old loan; there is no change in ownership. Result: no GST on the loan amount, repayments or interest. Your broker charges $1,100 (incl. $100 GST) — you can claim the $100 to your business‑use %.
Example 2 — Sale-and-leaseback (GST on sale; GST on rentals)
You sell a ute to the financier for $110,000 (inc. GST) and lease it back. You remit $10,000 GST on your BAS for the sale. Lease rentals include GST, which you can claim each BAS to your business‑use %. If the ute is a “car” subject to the car limit, input tax credits on acquisition were capped; the refinance does not change that.
Example 3 — Refinancing a balloon (no GST on refinance)
A $30,000 balloon on a chattel mortgage is due. You refinance the balloon over 36 months. Result: no GST on the refinance or repayments. Any broker fee may include GST and is claimable to your business‑use %.
Approval and documentation
GST treatment does not usually change approval fundamentals, but it can affect structure choice and the paperwork you’ll need:
- Business details, ABN/GST registration status and BAS history.
- Asset details (make, model, VIN/serial, age, condition) and ownership evidence.
- Payout letter for existing finance; proposed terms for the new facility.
- For sale-and-leaseback: sale contract/tax invoice and lease schedule showing GST on rentals.
- Bank statements and financials as required by the lender.
Learn more about asset refinance requirements and the approval process.
Get help with GST on asset refinance
Have a scenario you want checked? Send the details below and our Australian team will outline the GST treatment, structural options and next steps for your situation.
General information only. Speak with your tax adviser for advice specific to your circumstances.
Frequently asked questions
Does a simple asset refinance include GST on repayments?
No. Repayments and interest on a straight refinance are input taxed financial supplies and do not include GST. Only certain third‑party service fees may include GST.
When does GST show up during refinance?
Primarily when ownership changes via a sale to the financier (sale-and-leaseback or sale-and-hire purchase back). You’ll remit GST on the sale price, and under a finance lease, rentals include GST.
Can I claim GST again if I already claimed it when I first bought the asset?
No. A refinance without a new purchase does not create a new GST credit. You continue to apply business‑use apportionment and any Division 129 adjustments.
Do broker fees for refinance include GST?
Broker service fees generally include 10% GST, which you can claim to your business‑use percentage. Many lender establishment fees are input taxed and show no GST.
How are cars treated differently for GST?
Input tax credits for cars subject to the car limit are capped at 1/11th of the car limit in the year of acquisition. Refinancing later does not increase that credit.
Where can I learn more about GST on different finance products?
See our GST guides for asset finance, chattel mortgage, hire purchase, finance lease and operating lease.
Key takeaway
In Australia, GST on asset refinance hinges on ownership. A simple loan swap does not trigger GST; sale-and-leaseback or sale-and-hire purchase back usually does. Build the structure around your cash flow, tax position and end‑of‑term objectives — and confirm the GST treatment before signing.