Chattel mortgage GST claim — the short answer
If your business is registered for GST and the asset is used for a creditable (business) purpose, you can usually claim the full GST on the purchase price of the asset on the BAS for the period the purchase settles. This is because the dealer charges GST on the sale, and settlement funds paid to the dealer are treated as your consideration, even though they come from the lender.
- You generally claim the full input tax credit up front on the supplier’s tax invoice amount.
- Loan repayments under a chattel mortgage do not include GST. Interest is a financial supply (no GST). Some lender fees may include GST.
- If there’s private use or input-taxed use, apportion your claim.
How GST works on a chattel mortgage
A chattel mortgage is a secured loan used to buy business assets (e.g. vehicles, equipment). The supplier (dealer) issues a tax invoice with GST on the sale price. Your lender pays the supplier at settlement, you take ownership from day one, and the lender takes security over the asset.
Claim timing
- Accrual basis: Claim the full GST on the BAS for the period you receive the tax invoice (and the asset is supplied).
- Cash basis: You can typically still claim the full GST at settlement because the supplier is paid in full (by the lender) in that period.
What you can and can’t claim
- Asset purchase price: Claim the GST shown on the supplier’s tax invoice, subject to business-use percentage and car limits.
- Loan repayments: No GST on repayments. Interest is not subject to GST.
- Lender fees: Some fees (e.g., documentation or monthly account fees) may have GST; check your finance contract/tax invoice.
- Government charges: Stamp duty and registration don’t include GST.
- Insurance: Premiums often include GST (and stamp duty). Claim the GST portion to the extent of business use.
Check your invoice and BAS timing
Want the mechanics of this product, beyond GST? See How a Chattel Mortgage Works and the broader Chattel Mortgage overview.
Common scenarios that change your GST claim
- Private use or mixed use: Only claim the business-use portion. If your usage changes later, you may need an adjustment under GST change-in-use rules.
- Buying from a private seller or a non-registered supplier: There’s no GST on the sale, so there’s no GST to claim.
- Margin scheme sales (often on used vehicles/equipment): GST may not be shown on the invoice in a way that allows an input tax credit. Check the invoice.
- Trade-ins and changeover deals: Your input tax credit is based on the GST shown on the dealer’s tax invoice for the purchase, not just the changeover figure.
- Cars and car limits: Input tax credits on cars can be capped by the ATO’s car limit. Luxury Car Tax and the car limit can restrict your GST claim; check current ATO thresholds.
- Balloon amounts: A chattel mortgage balloon is a principal repayment at the end. There’s generally no GST on the balloon itself, but any separate payout/admin fees may have GST.
Get help with edge cases (trade-ins, private sales, balloons)
BAS checklist for a chattel mortgage GST claim
- Valid supplier tax invoice that shows GST for the asset purchase.
- Settlement statement from the lender (shows the supplier was paid).
- Finance contract noting product type (chattel mortgage) and any fees.
- Business-use percentage documentation (e.g., logbook for vehicles) if not 100% business use.
- Correct BAS coding (capital vs non-capital acquisitions) and timing.
Note: Instant asset write-off and depreciation are income tax concepts and separate from GST. For tax deductions on interest, depreciation and immediate write-off rules, see Chattel Mortgage Tax Benefits and our Asset Finance Tax Benefits Guide.
Chattel mortgage vs other structures for GST
- Chattel mortgage: Generally claim full GST on the purchase up front (subject to eligibility and use).
- Finance lease: GST is typically charged on each rental and on the residual, so credits are claimed over time. See Finance Lease GST Treatment.
- Operating lease: Similar GST-on-rentals approach. See Operating Lease GST Treatment.
- Hire purchase: Post-2012 rules generally allow upfront GST credits too. See Hire Purchase GST Treatment.
Still deciding which structure fits? Compare options: Chattel Mortgage vs Lease and Chattel Mortgage vs Hire Purchase. For a broad overview across products, see Asset Finance GST Treatment.
Get help with your chattel mortgage GST claim
Send your dealer invoice or quote and we’ll confirm what GST you can claim, when to claim it, and how the finance contract impacts your BAS.
Frequently asked questions
When can I claim GST on a chattel mortgage?
Usually on the BAS for the period the purchase settles and a valid tax invoice is issued. On cash basis, you can generally still claim the full GST at settlement because the supplier is paid in full by the lender.
Do chattel mortgage repayments include GST?
No. Repayments are principal plus interest. Interest is a financial supply (no GST). Some lender fees may include GST and can be claimable to the extent of business use.
Can I claim 100% of the GST if I use the asset partly for private purposes?
No. You can only claim the business-use percentage. Keep records (e.g., a vehicle logbook) and adjust if your use changes later.
What if I buy from a private seller?
Private sales and many margin scheme sales don’t show GST you can claim. If there’s no GST on the invoice, there’s no input tax credit.
How do car limits affect my GST claim?
Your GST credit for cars can be capped by the ATO’s car limit. Luxury Car Tax and the car limit can restrict the input tax credit even if the invoice shows more GST. Check current thresholds.
Is the balloon payment subject to GST?
The balloon on a chattel mortgage is typically a principal repayment, so there’s generally no GST on the balloon itself. Separate payout/admin fees may include GST.
How is GST different under a lease?
With a finance or operating lease, GST is usually charged on each rental and on the residual, so you claim credits progressively. See Finance Lease GST Treatment and Operating Lease GST Treatment.
Where do I enter this on the BAS?
Most businesses record the asset purchase as a capital acquisition and claim the input tax credit in the same period (subject to your accounting basis and eligibility). Your bookkeeper or accountant can confirm the correct BAS labels for your software and method.
Key takeaway
For most GST-registered businesses using the asset for taxable activities, a chattel mortgage lets you claim the GST on the purchase price up front, while repayments themselves don’t include GST. Always check invoices, usage, any car limits and fees, and keep settlement documents on file.
If you want help choosing between a chattel mortgage, lease or hire purchase based on your GST and cash flow preferences, send an enquiry.