Commercial Loan

A Chattel Mortgage is a “GST friendly” loan that can be particularly attractive for business, entitling the borrower to claim the GST component of the purchased asset "up front", while repaying the loan over time.

This style of loan is very similar to a standard loan facility where goods are “owned” by the customer and the lender takes a “mortgage” or “charge” over the goods, to secure the loan.

Overview:

Advantages:

Conserves Working Capital

• Allows the acquisition of required capital equipment without using operating capital for funding

Flexibility

• Structure the facility with or without a balloon payment, select the length of the finance contract and structure the repayments to suit cashflow
• Cash outflow (money paid) can be varied to match cash inflow (money coming into your business) and the term of the finance contract can be matched to the expected life of the asset, ensuring that payments are not being made on equipment that is no longer contributing towards income

Tax Treatment

• Instalments are comprised of both a “principal” and “interest” component
• The borrower claims for the “interest” component and depreciation on the asset as deductible expenses. (Note: the instalment itself is not tax-deductible)
• Tax detectability is determined by the extent to which goods are being used to generate assessable income
• GST is not payable on individual loan instalments. Eligible borrowers can claim the GST component of the purchased asset as an ITC on their GST/BAS return.
• Generally, Chattel Mortgage provides a better Tax efficiency in the initial stages of a finance term, compared to say a Lease

Need more information? Contact us and we'll be happy to answer any questions or provide further details.

Call us today on (03) 9005-6633 and experience the difference!