The chattel mortgage is virtually identical to commercial hire
purchase agreement. Key difference lies in ownership and full GST credit
can be claimed on purchase on cash accounting.
Unlike the hire
purchase agreement where you take ownership of the good at the time of
final payment, under a chattel mortgage the financer advances funds to
you to purchase a good, and you take ownership of the good at the time
of purchase.
Once the contract is completed, the mortgage is removed giving you clear title to the good.
You
may want to use the chattel mortgage to acquire business equipment
(e.g. motor vehicle used wholly or predominantly for business purpose),
because of the following reasons: -
The finance is secured
against the vehicle, allowing lower interest rates. The financier takes a
"mortgage" over the vehicle as security for the loan, by registering a
Fixed and Floating Charge with ASIC.
You run a business through
the cash method of accounting. You are able to claim back the GST
component on the asset right away.
Disclaimer
Every effort has been made to offer the most current, correct and clearly expressed information possible within this site. Nonetheless, inadvertent errors can occur and applicable laws, rules and regulations may change.
These materials on this website are general in nature. It is made available on the understanding that the JH Business Services & Taxation is not thereby engaged in rendering professional advice. Before relying on the material in any important matter, users should carefully evaluate its accuracy, currency, completeness and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.
JH Business Services & Taxation Accounting | Business Advisory | Tax Services Specialist in small to medium business & personal tax services
Norwest Office
Suite 205 29-31 Lexington Drive Bella Vista NSW 2153