How does a chattel mortgage work?

Before outlining the GST and income tax implications of a chattel mortgage it is important to explain the nature of the chattel mortgage car finance option.

A chattel mortgage occurs where a finance lender provides a loan or finance facility to a taxpayer and the taxpayer uses that facility to purchase a vehicle. Unlike a commercial hire purchase agreement, under a chattel mortgage a taxpayer becomes the owner of the asset at the time that the agreement is entered into. Security for a chattel mortgage finance is a mortgage over the vehicle.

Chattel Mortgage GST and taxation implications?

• A cash basis taxpayer for GST purposes is entitled to claim all of their input tax credits in relation to an acquisition using this finance option at the commencement of the arrangement. ie. If a taxpayer who accounts for GST on a cash basis acquired a $44,000 vehicle, then they would be entitled to input tax credits of $4,000 (i.e. 1/11th of $44,000) at the commencement of the agreement (i.e. in the BAS for that quarter).
• The interest component on the finance may also be claimable.

Need further information?

If you require an online instant chattel mortgage quote, click here for our chattel mortgage calculator.

You can also talk to an Platinum Car Loans finance consultant now on 1300 554 553 or complete our friendly enquiry form and one of our experienced chattel mortgage consultants will call you back shortly.