Key highlights
- GST applies to most machinery purchases and affects what you finance
- Registered businesses may claim a GST credit through their BAS
- Finance can be structured around the GST-inclusive or exclusive price
- Timing of the GST credit can affect short-term cash flow
- Confirm all GST treatment with your accountant, not online summaries
GST sits quietly inside every machinery purchase, yet it can affect your cash flow, your finance structure and the amount you borrow. Getting the basics of GST and machinery finance clear helps you plan the purchase properly. At Overdrive Machinery Finance, Simon Kendrick arranges finance across 80+ banks and non-bank lenders for eligible ABN holders, structured to suit how the GST works, while your accountant confirms the exact treatment and any credits for your business.
How does GST apply to a machinery purchase?
Most machinery bought from a GST-registered seller in Australia includes GST in the price, typically ten per cent on top of the base cost. So a machine advertised at a certain figure may be quoted either GST-inclusive or GST-exclusive, and it is important to know which, because it changes the total you pay and potentially finance. For a GST-registered business, that GST is generally recoverable as a credit, but you still pay it upfront at purchase. Understanding whether the price you are working with includes GST is the first step to planning the purchase and the finance around it accurately, and it is worth clarifying with the seller in writing.
Can you claim the GST back?
If your business is registered for GST, you can generally claim a GST credit for the GST included in the price of a machine used for your business, reported through your Business Activity Statement. In effect, the GST portion is recovered from the ATO, so the real cost of the machine to your business is closer to the GST-exclusive amount over time. The key word is timing: you pay the GST at purchase but recover it later when you lodge your BAS, which can be monthly or quarterly. This creates a short-term cash-flow gap that is worth planning for. Your accountant can confirm your entitlement and the process.
Should you finance the GST-inclusive or exclusive amount?
Finance can often be arranged on either the GST-inclusive price or, for some registered businesses, structured so the GST is handled separately. Financing the full GST-inclusive amount spreads the whole cost, including the GST, across your repayments, which protects cash flow upfront but means you are effectively borrowing the GST until your credit comes back. Alternatively, some businesses use their expected GST credit to reduce the financed amount once it is received. There is no single right answer; it depends on your cash-flow position and how quickly you recover the credit. This is a point worth discussing with both your broker and your accountant before settling the structure.
How does GST affect cash flow at purchase?
The cash-flow pinch comes from paying GST upfront but recovering it later. On a large machine, the GST alone can be a significant sum, and if you fund it from working capital, that money is tied up until your BAS credit arrives. Financing the GST-inclusive amount avoids that upfront hit by spreading it, while a business with strong reserves might prefer to pay the GST and reclaim it. Knowing your BAS cycle helps: recovering a credit next month is very different from waiting most of a quarter. Planning this properly stops an otherwise sound purchase from squeezing your cash flow at exactly the wrong moment.
Does the finance product change the GST treatment?
It can, which is another reason to align your finance with advice. With a chattel mortgage, where your business owns the machine, the GST on the purchase is generally claimable upfront through your BAS in the usual way. Other arrangements, such as certain leases or rentals, can treat the GST differently, sometimes spreading it across the payments instead. These distinctions affect when and how you recover GST, and they interact with your broader tax position. Because the treatment varies by product and by business, it is not something to assume from a general article. Confirm the specifics with your accountant so the structure genuinely suits you.
How does a broker help you plan around GST?
A broker cannot give tax advice, but they can arrange the finance in a way that works with the GST treatment your accountant recommends. Simon can structure the loan on the GST-inclusive amount to protect cash flow, or set it up so an expected GST credit reduces the balance, whatever suits your BAS cycle. By comparing 80+ lenders on one application, he finds a structure and repayment rhythm that accommodates the upfront GST and your recovery timing. The practical value is a finance package that fits how GST actually moves through your business, rather than a rigid product that ignores it, subject to lender criteria.
GST does not have to complicate your next machinery purchase. Simon Kendrick will run a soft credit check that will not mark your file, compare 80+ banks and non-bank lenders on one application, and structure the finance to work with your GST position and BAS cycle. For eligible applicants, indicative decisions can arrive within 24 to 48 hours. Remember this is general information; confirm all GST treatment with your accountant. Get an obligation-free quote from Overdrive Machinery Finance and plan the purchase with cash flow in mind, subject to lender assessment.
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