What are the tax implications of a Chattel Mortgage?
GST is charged on the purchase price of the vehicle, but not on the monthly repayments or the residual amount (ballon amount) if applicable. The GST component of the vehicle purchase price can be claimed upfront rather than in installments over the life of the Chattel Mortgage agreement. Where the vehicle is used predominately for business purposes, the hirer can claim the interest component of the lease payments and depreciation up to the luxury car tax threshold or depreciation limit of $57,123.
