When your company buys a used delivery van, prepare two separate tax checks: the capital-allowance position and any recoverable GST. The seller’s description of the vehicle is not enough. Confirm its classification, business use, legal purchaser, financing and invoice details before treating the full payment as an expense or assuming a GST claim.
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Start with the vehicle’s classification and use
IRAS’s capital-allowance guidance distinguishes qualifying business vehicles, including vans and lorries, from restricted private and business cars. It also addresses qualifying COE costs. Ask the accountant to check the actual vehicle and expenditure; a company name on a passenger-car invoice does not remove the restrictions.
Example: the invoice includes several different amounts
A dealer’s invoice combines the van price, an administrative fee, insurance and financing-related amounts. Finance should identify the components and supporting documents. Do not assume every item shares the same accounting, capital-allowance or GST treatment.
Keep the acquisition evidence together
- Vehicle registration and classification details.
- Purchase agreement and invoice naming the company.
- Ownership and handover dates.
- Evidence of business use.
- Deposit, trade-in and final payment records.
- Loan or hire-purchase terms and repayment schedule.
- Any separate COE or renewal documentation.
Reconcile the seller, vehicle identifier and payment beneficiary before releasing the balance. If the founder pays personally, record the funding trail rather than changing the buyer’s identity retrospectively.
Claim actual eligible GST, not a percentage of the bank payment
Check the supplier’s GST status, valid purchase evidence and the company’s input-tax eligibility. Used-vehicle transactions can have different invoicing treatments. IRAS’s motor-trade guidance describes relevant sale schemes. Do not assume that every used vehicle carries GST calculated on its full price, or that a private seller has charged GST.
Reconcile the fixed-asset and tax schedules
Record the vehicle appropriately in the books and maintain a separate capital-allowance schedule. Accounting depreciation and the tax claim are different calculations. Ask the accountant to identify the qualifying cost, applicable method and treatment of recoverable tax, deposits and financing.
Plan for later changes
Retain sale, disposal, trade-in and COE-renewal records when circumstances change. These events may affect tax computations even after the purchase year.
Does buying second-hand automatically prevent capital allowances?
No. The relevant classification, business-use and expenditure conditions still need to be assessed.
Can we claim GST if the seller did not charge it?
Do not invent input tax. Review the transaction documents and actual tax treatment.
Related guidance
capital-allowance methods; support for input-tax amounts; fixed-asset registers.
Discuss your next step
Our accounting team and tax advisers can review your vehicle purchase file, fixed-asset schedule and GST position. Email [email protected] or WhatsApp +65 8501 7133. Legal advice, where needed, is provided by advisers from associated law firms.