Chattel mortgage – tax and GST implications

Read our guide on tax and GST implications with Chattel Mortgage.

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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, updated on May 5th, 2022       

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Chattel mortgage – tax and GST implications

Are you buying a car for business purposes (50% or over)? You may have heard of a chattel mortgage. A chattel mortgage is a premium option for business owners and ABN holders. It allows them to get a great deal on car finance and possibly reduce their tax and GST outlay.

One tax deduction businesses often take advantage of in a chattel mortgage is interest charges on the loan. You may claim interest charges as deductions on your Business Activity Statement. (BAS.)

Another deduction is claiming depreciation. You may claim depreciation up to the depreciation limit, currently $57,466.00 for Financial Year 2014-15. You may also pay GST on the initial purchase price of the car; however, this GST is also claimable (if you’re registered to collect Federal Government GST.) Monthly repayments are GST free, as is any balloon or residual value payment.

For businesses registered for GST on a cash basis may also claim back the GST paid in the initial purchase back as an Input Tax Credit on their next BAS. Chattel Mortgages are flexible and low-cost car finance options for business. Terms range from 12 to 60 months and come with fixed interest rates. Businesses may apply for 100% finance and amortise other extras such as insurance in the loan. Best of all, you can budget in advance for repayments as you’ll know exactly how much you’re spending each month. You could be on the road without interrupting your cash flow!

Please note that Chattel Mortgages are not regulated under the National Credit Consumer Protection Act. The information here is of a general nature only. Consult a financial professional to learn more about chattel mortgages and if they’re right for your business.