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Chattel Mortgage

A tax effective business finance tool.

A chattel mortgage is basically a business loan where the borrower actually takes ownership of the goods upon payment by the financier. All of the GST is often claimed back in the business' first BAS.

Advantages and applications.

The Chattel Mortgage or Commercial Loan is business finance solution for acquiring movable items. These may be relatively large assets which will generally have a service life of several years or more. Types of assets that can be funded under this product can be (but not limited to):

• Manufacturing machinery.
• Cars, trucks and commercial vehicles.
• Computers and IT systems.
• Cranes and construction equipment.

Who can benefit the most from using this product:

This is an ideal finance product for smaller businesses who are either under the simplified tax system (STS) and have a turnover less than $2 million. You are able to pool assets and claim the one depreciation rate of 15% in the first year and 30% diminishing value after that, no matter what type of asset is being financed.

Tax situation.

With a Chattel Mortgage, the depreciation benefit is quite attractive to businesses who report GST on a cash basis, as you are entitled to claim the GST in full. You can also claim depreciation on the asset and the interest on the loan, but you’ll have to pay stamp duty up front.


The security is the asset itself and the financier takes a mortgage over that asset, which means there is a charge registered against your company.

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