Chattel mortgage provides finance for companies, trusts and businesses to purchase goods that are used within the business; such as motor vehicles, trucks, earthmoving, industrial plant and professional equipment. The asset must be for business use more than 50% of the time.
Tax Implications of Chattel Mortgage
This product is a means of minimising capital expenditure for your business, allowing you for better day to day cash flow. The business is the owner of the asset therefore it is suitable for businesses using the ‘cash’ method of accounting for GST as it allows for claiming of full GST at your next BAS. As you the business is the owner of the asset, interest on the loan and depreciation can be claimed. Your business must have an ABN and must be registered for GST to able to claim the GST paid. There are no taxation impacts applicable to the residual/balloon payments.
Chattel Mortgage Tax Benefits
- Chattel mortgage products are available over terms of 12 to 60 months with or without a residual (one to five years)
- A final residual/balloon value can be applied to the mortgage enabling the monthly repayments to be tailored to a budget and business
- The interest rates are fixed for the term of the loan and payments remain constant.
- The costs to the business are known in advance
- A cash deposit or trade may be used to reduce the amount financed and therefore also the monthly repayments.
Disclaimer: The information contained within this website is for information purposes only and is not intended as a substitute for professional advice. The information provided is of a general nature and does not take into account the specific objectives, needs and/or financial situation of any individual. Accordingly you should consult with a qualified professional such as an accountant or financial adviser before acting on any of the information contained within this website.