A Melbourne Finance Chattel Mortgage is an ideal way for individual business customers to maximise the taxation benefits gained from financing a new vehicle
Whether they are upgrading an existing vehicle, or acquiring additional vehicles, a Melbourne Finance Chattel Mortgage offers individual business customers many advantages, and is designed especially for those sole traders and partnerships who account for their business operations on a cash basis.
Individual business customers who wish to place a deposit into their finance contract, or nominate the value of the balloon (final instalment) on their contract, will typically use a Commercial Hire Purchase agreement, as this type of finance contract offers maximum flexibility for the customer to set the monthly repayments to suit their budget.
Under both a Chattel Mortgage and Commercial Hire Purchase agreement, the Goods and Services Tax (GST) is contained in the purchase price of the vehicle, but does not apply to the monthly repayment or balloon (final instalment) on the contract. Normally, those individual business customers who are registered for GST purposes and enter into a Commercial Hire Purchase agreement will apply Input Tax Credits (ITCs) to claim back some or all of the GST (up to a maximum amount of $5,183) contained in the price of the motor vehicle.
To afford those individual business customers who account on a cash basis the same taxation benefits as those who account on an accrual basis, Melbourne Finance has introduced the Melbourne Finance Chattel Mortgage.
With a Melbourne Finance Chattel Mortgage, individual business customers accounting on a cash basis can claim back the GST as soon as they lodge their next Business Activity Statement (BAS).