# GST on asset finance — how the claim back works for tradies

> How GST works when a GST-registered tradie finances a work asset. The claim back differs between a chattel mortgage and hire purchase, and it functions like a deposit.

Source: https://tradiefinance.co.nz/glossary/gst-on-asset-finance
Published: 2026-05-08T08:00:00.000Z
Category: asset-finance
Tags: glossary, gst, asset-finance, chattel-mortgage, tax

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## The short version

New Zealand GST is 15%. If your trade business is **GST-registered**, the GST you pay when you buy a work asset is generally claimable as an input tax credit — but *when* you can claim it depends on how the finance is structured.

This matters because the GST claim back is real cashflow. On a $46,000 GST-inclusive work van, the GST component is **$6,000** ($46,000 ÷ 23 × 3). Getting that back functions like an automatic deposit.

## Chattel mortgage: claim it up front

Under a [chattel mortgage](/glossary/chattel-mortgage), your business owns the asset from day one and is treated as having purchased it outright (the lender just holds security). So the **full GST is claimable in the GST return period in which you bought the asset**, subject to your filing frequency (monthly, two-monthly, or six-monthly) and accounting basis (invoice or payments).

That means on a two-monthly cycle, you could have the whole $6,000 back within a couple of months of settlement.

## Hire purchase: the timing differs

Under [hire purchase](/glossary/hire-purchase), the lender retains ownership until the final payment. A hire purchase is still a "supply" for GST and the full GST credit is generally claimable up front on an invoice basis — but if you account for GST on a **payments (cash) basis**, special rules treat hire purchase like an invoice-basis supply so the credit isn't dribbled out payment by payment. The practical upshot: confirm your basis with your accountant, because the timing of when that $6,000 lands can move.

<Callout variant="warn" title="Registration and apportionment matter">
The claim back only applies if you're GST-registered. If the asset is part private use (the ute does the school run too), you can only claim the business-use proportion, and you may owe GST adjustments later. A logbook or clear apportionment keeps this clean.
</Callout>

## GST on the sale, too

When you eventually sell or trade the asset, if you're GST-registered you'll generally have to **return GST on the sale price**. Tradies who claimed GST on purchase sometimes forget this and get caught at trade-in time. It nets out fairly over the life of the asset, but it's a line item to expect, not a surprise.

## See also

- [Chattel mortgage](/glossary/chattel-mortgage)
- [Hire purchase](/glossary/hire-purchase)
- [Do I need a deposit to finance a work van?](/help/do-i-need-deposit-for-work-van)