Overview
GST treatment refers to how GST is charged and when you can claim input tax credits on financed restaurant equipment. Getting this right affects cash flow, BAS reporting and the total cost of ownership.
At a glance (restaurant equipment finance GST Australia):
- Chattel mortgage/hire purchase: claim the full GST on the purchase price at settlement (if eligible), repayments generally have no GST.
- Finance/operating lease: pay GST on each rental, claim progressively; residual/buyout usually includes GST.
- You need to be GST-registered, hold a valid tax invoice and apportion for any private use.
How GST works by finance type
The finance product you choose drives when GST is paid and when you can claim input tax credits. Here’s how the common options compare for hospitality businesses.
Chattel mortgage (equipment loan)
- GST is included in the supplier invoice for the full purchase price at settlement.
- If you’re GST-registered and the asset is used to make taxable supplies, you can generally claim the entire input tax credit on your next BAS (1/11th of the GST-inclusive price).
- Loan repayments and any balloon are repayments of principal plus interest. Principal has no GST; interest is input taxed (no GST).
Hire purchase
- For agreements entered into on or after 1 July 2012, you can usually claim the full GST credit upfront at the start (cash or accrual basis), provided you have a valid tax invoice.
- Interest and credit charges are input taxed (no GST).
Finance lease
- GST is 1/11th of each rental payment. You claim input tax credits progressively as you pay the rent.
- If you buy the asset at lease end, the residual/buyout typically includes GST, which is claimable if eligible.
Operating lease
- Similar to finance lease for GST: GST on each rental, claimed over time.
- End-of-term options (return, extend, or buy). If you buy, GST generally applies to the purchase price.
Want help selecting a product based on GST timing and cash flow? Compare GST options with an expert
What you can claim and when
- Registration: You must be registered for GST and use the asset to make taxable or GST-free supplies to claim input tax credits.
- Business use percentage: Apportion your claim for any private or input-taxed use. Most restaurant equipment is 100% business use, but confirm if mixed.
- Deposits and trade-ins: Deposits are part of the consideration and don’t change the total credit. Trade-ins are separate supplies—ensure invoices clearly show consideration and GST so BAS entries are correct.
- Fees and charges: Dealer and some admin fees may have GST. Interest and credit charges are commonly input taxed (no GST). Broker invoices typically include GST.
- Balloons and residuals: Chattel mortgage/hire purchase balloons are principal (no GST). Lease residual buyouts generally include GST, which may be claimable.
- Used equipment: If purchased from a GST-registered supplier issuing a tax invoice, GST is claimable. Private sales usually have no GST, so no input credit.
- Imported equipment: Import GST is claimable on your BAS if eligible (often via deferred GST). Leases still attract GST on rentals.
- BAS method: For chattel mortgage and post‑2012 hire purchase, eligible businesses typically claim the full credit at settlement (cash or accrual). Leases are claimed as you pay.
- Documentation: Keep the tax invoice, finance agreement, settlement statement, and any import or trade-in paperwork to support your BAS.
Approval and documentation
Lenders and your BAS both rely on clear paperwork. Expect to need:
- Supplier tax invoice quoting ABN and GST on the equipment price.
- Signed finance agreement (chattel mortgage, hire purchase, finance/operating lease).
- Settlement statement and any balloon/residual schedule.
- Bank statements and basic financials (requirements vary by lender and amount).
- For imports: customs/import declaration and proof of deferred GST registration if applicable.
Accurate documents reduce friction at settlement and make BAS claims straightforward.
GST examples for restaurants
Example 1: Chattel mortgage on a combi oven
Price $44,000 inc GST. At settlement, you hold a tax invoice showing $4,000 GST. You can generally claim $4,000 on your next BAS. Monthly repayments (principal + interest) have no GST on the principal or interest. If there’s a $10,000 balloon, that balloon has no GST.
Example 2: Finance lease on refrigeration
Monthly rental $1,100 inc GST for 36 months. Each month you pay $100 GST and can claim $100 as an input credit (subject to eligibility). At lease end, you buy the units for a $5,500 residual inc GST—claim $500 GST on the BAS when paid.
Common mistakes to avoid
- Leasing to accelerate GST credits when cash flow needs the upfront claim available under a chattel mortgage/hire purchase.
- Claiming GST without a valid tax invoice (or with missing ABN/GST breakdown).
- Forgetting GST on lease residuals or assuming chattel mortgage balloons include GST.
- Claiming GST on private seller purchases where no GST was charged.
- Not apportioning for any non-business use.
Tax rules can change and individual circumstances differ—speak with your accountant for advice specific to your venue.
Get help with this topic
Have a question about restaurant equipment finance GST treatment, claim timing, or which structure fits your cash flow? Send an enquiry and an Australian specialist will respond within 1 business day.
Frequently asked questions
How does GST work on restaurant equipment under a chattel mortgage?
GST is charged on the full purchase price on the supplier invoice. If you are GST-registered and eligible, you generally claim the full GST on your next BAS at settlement. Repayments (including any balloon) are not subject to GST; interest is input taxed.
What’s different under hire purchase?
Post‑1 July 2012 agreements allow eligible businesses on cash or accrual basis to claim the full GST at commencement, provided you hold a valid tax invoice. Interest/credit charges are input taxed.
Do lease payments include GST?
Yes. For finance and operating leases, each rental includes GST (1/11th). You claim input tax credits progressively as you pay. If you buy the asset at lease end, the residual typically includes GST.
Can I claim GST on used or private purchases?
You can claim GST only where it was charged and you have a valid tax invoice. Private sales usually have no GST, so no credit is available. Used gear from a GST-registered supplier usually includes GST and is claimable.
How are deposits, trade-ins and fees treated?
Deposits count toward the consideration and don’t change the overall input credit. Trade-ins are separate taxable supplies—ensure invoices reflect the right GST. Dealer/admin fees may include GST; interest and most credit fees are input taxed.
What records do I need for my BAS?
Keep the supplier tax invoice, finance contract, settlement statement, and any import/trade-in paperwork. These support your GST claims and auditor queries.
Final takeaway
For restaurant equipment finance, GST timing can materially change cash flow. Chattel mortgage and hire purchase generally allow an upfront claim on the purchase price, while leases spread GST across rentals and may add GST to the residual buyout.
Choose the structure that fits your BAS cycle, cash flow and ownership goals—and confirm details with your accountant.