FAQ: What are the tax & GST implications of a Chattel Mortgage?
What are a Chattel Mortgage's tax & GST implications?
Under a Chattel Mortgage, tax deductions may be available where the car is used for income producing purposes.
Generally, available tax deductions under a Chattel Mortgage include interest charges on the loan and depreciation on the vehicle up to the Depreciation Limit.
Under a Chattel Mortgage, GST is charged on the purchse price of the car or vehicle. There is no GST charged, however, on the monthly repayments or the balloon (residual) payment.
Customers who are registered for GST on a Cash basis can generally claim the GST contained in the purchase price of the vehicle as an Input Tax Credit on their next BAS.