GST car limit — the short answer: it’s the maximum value the ATO lets you use to work out depreciation and GST credits on a car bought for business use. For the 2026–27 financial year, that limit is $69,883. So if your business car costs more than that, you don’t get to claim GST or depreciation on the extra.
What Is the GST Car Limit?
The car limit is an annual threshold set by the ATO. It caps the value you can use for two things: depreciation deductions and GST credits on a car you buy for business. The ATO reviews it each year. For 2026–27, the car limit is $69,883. For 2025–26, it was $69,674.
How the Car Limit Affects Your GST Claim
If you’re GST-registered and buy a car for business, you can generally claim a GST credit on the purchase (see our business car loan guide for how this fits into financing the purchase). However, the ATO caps that credit. The maximum GST credit you can claim is one-eleventh of the car limit. For 2026–27, that works out to $6,353. It doesn’t matter how much GST you actually paid — if your car costs more than the car limit, your credit still maxes out at that figure.
How the Car Limit Affects Depreciation
The same threshold caps your depreciation base. Even if you pay $90,000 for a car, you can only depreciate up to the car limit. So the portion of the price above that threshold isn’t deductible at all, through depreciation or otherwise. This applies in the year you first use or lease the car for business.
Does the Car Limit Apply to Every Vehicle?
No. The car limit only applies to cars designed to carry fewer than 9 passengers and less than one tonne. Say your vehicle is a ute, van or truck built to carry a load of one tonne or more. Or it’s designed to carry 9 or more passengers. In that case, the car limit doesn’t apply, and you can generally claim GST and depreciation on the full business-use cost.
Does Chattel Mortgage vs Other Finance Change the Limit?
Not really. The car limit is an ATO rule, not something set by your finance provider. It applies whether you buy the car outright, use a chattel mortgage, or finance it another way. What changes between finance types, instead, is when and how you can claim. With a chattel mortgage, you take ownership immediately. So you can generally claim the upfront GST credit, up to the car limit, in the BAS period you bought or first used the car for business.
Talk to Your Accountant
This article is general information only, not tax advice. Car limit figures change each financial year. In addition, your eligibility depends on your business structure and how you use the vehicle. So always confirm current thresholds and your own position with your accountant before you commit to a purchase.
Curious what your repayments could look like on a car near the limit? Try our business car loan calculator to estimate repayments. Or, get a free, no-obligation quote and one of our brokers will help you compare chattel mortgage options.
Frequently Asked Questions
What is the car limit for 2026–27?
The car limit for the 2026–27 financial year is $69,883. The ATO updates this figure every 1 July, so always check the current-year amount before you calculate a claim.
Can I claim GST on a car that costs more than the car limit?
Yes, but only up to the cap. The most GST credit you can claim is one-eleventh of the car limit, regardless of the car’s actual price or the GST you paid.
Does the car limit apply to utes and vans?
Generally, no. Vehicles designed to carry one tonne or more, or 9 or more passengers, fall outside the car limit. You can typically claim GST and depreciation on their full business-use cost instead.
Does the car limit change every year?
Yes. The ATO reviews and adjusts the car limit each financial year, usually in line with inflation. That’s why it’s worth checking the current figure before you buy.
Does a chattel mortgage change how the car limit works?
No. The ATO sets the car limit, and it applies the same way no matter how you finance the vehicle. A chattel mortgage just lets you take ownership immediately, so you can generally claim your capped GST credit upfront rather than progressively. This ties directly into the broader tax benefits of a chattel mortgage for ABN holders.