Overview
The phrase “no deposit” simply means you finance 100% of the asset cost (and often fees) instead of contributing cash upfront. For GST, the total credit you can claim is driven more by the finance product and your GST registration and business use than by whether you paid a deposit.
- Chattel mortgage and hire purchase: GST is generally accounted for on the asset purchase price upfront.
- Finance lease and operating lease: GST is spread across each rental; GST also typically applies to the residual or end-of-term purchase.
- No deposit affects who funds GST at settlement and when cash leaves your business, not the total claim over the asset’s life.
How GST works with no deposit asset finance
The GST treatment hinges on the finance structure you choose. Here is how the common structures typically work for GST in Australia when you proceed with little or no deposit:
Chattel mortgage (loan) — GST treatment
- GST is included in the supplier’s tax invoice for the asset. If you are GST-registered and the asset is used in your business, you can generally claim the input tax credit for the GST shown on that invoice.
- Monthly repayments and interest do not include GST (some establishment or monthly fees may include GST).
- No deposit: lenders often offer a deferred “GST payment” or “GST holdback” so you can use your next BAS refund to reduce the balance.
Hire purchase — GST treatment
- For HP agreements entered into after 1 July 2012, GST generally applies to the full purchase price upfront.
- Registered businesses can typically claim the full GST credit upfront (subject to business use % and a valid tax invoice). Interest is a financial supply and usually does not include GST. Fees may include GST.
- No deposit: similar cash-flow considerations to chattel mortgage; many lenders can structure the GST funding to line up with your BAS.
Finance lease and operating lease — GST treatment
- The lessor owns the asset and charges you rentals that include GST. You claim GST credits on each rental as it is invoiced or paid (depending on your BAS method).
- Residuals/end-of-term purchase amounts usually attract GST, which you may be able to claim subject to business use and registration.
- No deposit: opting for zero rentals in advance keeps more cash in your business now; you claim GST progressively on each rental.
Cash flow, BAS method and timing
- Accounting method matters: under accruals, claims generally align with receiving a valid tax invoice; under cash, claims usually align with payments made. Confirm the specifics with your accountant for your method and contract.
- No deposit can be paired with a deferred GST repayment or short-term GST holdback to let your BAS refund assist funding.
- Deposits vs no deposit: a deposit paid to the supplier includes GST which you may claim then; with no deposit, the lender typically funds the GST and your claim timing follows the product rules above.
Examples (numbers kept simple)
Example 1: Chattel mortgage, no deposit
Asset price $110,000 incl. GST. Supplier issues a tax invoice for $110,000 (GST $10,000). Lender funds $110,000 and sets a one-off “GST payment” in month 3. You lodge BAS and claim the $10,000 input tax credit (subject to eligibility). You then use the BAS refund to make the month‑3 GST payment, reducing the principal. Regular repayments and interest don’t include GST (fees may).
Example 2: Finance lease, no deposit
Lessor buys the asset. Your monthly rental is $2,200 incl. GST ($200 GST). You claim $200 GST per rental as invoiced/paid (per BAS method). At term end, a $33,000 residual would generally include GST ($3,000), which you may claim subject to business use and registration.
Key considerations before you choose
- Eligibility and pricing: stronger files usually have more flexibility to finance 100% and to use GST deferral features.
- Business use and registration: GST credits require GST registration and business use; apportion claims if there is private use.
- Vehicle and car limits: for passenger vehicles, GST input credits may be capped by the ATO car limit and LCT may apply.
- Supplier invoice: ensure you receive a valid tax invoice; second-hand or margin scheme sales may provide no GST to claim.
- End-of-term position: chattel mortgage balloons don’t usually include new GST; lease residuals typically do.
Approval and documentation
Lenders focus on how the asset will be used, your ability to service repayments, and the clarity of the transaction. For GST-aligned structures, they may ask for supplier quotes/invoices, asset details, ABN/GST registration evidence, recent BAS, financials or bank statements, and confirmation of the intended end‑of‑term outcome.
Clear documentation reduces back‑and‑forth and helps align the structure to your BAS timing.
Get help with GST on no deposit asset finance
Ask us to compare structures, clarify GST timing by product, and shape funding to your BAS cycle. Our team works with Australian businesses across vehicles, equipment and machinery.
Prefer to read more first? Explore GST by product: Asset Finance GST, Chattel Mortgage GST, Hire Purchase GST, Finance Lease GST, Operating Lease GST, Vehicle Finance GST.
Frequently asked questions
Does no deposit change the GST you can claim?
Usually no. No deposit affects cash flow, not the total GST credit entitlement. Timing is driven by the product (loan/HP vs lease), your BAS method, and valid invoicing.
Is GST charged on asset finance repayments?
Chattel mortgage and hire purchase repayments generally do not include GST (interest is a financial supply). Some fees may. Lease rentals include GST, and you claim progressively.
How does cash vs accrual BAS impact GST timing?
Accruals generally allows claiming on receipt of a valid tax invoice. Cash-basis typically aligns claims with payments. Confirm specifics with your accountant for your contract.
What about GST on balloons and residuals?
Chattel mortgage balloons usually don’t attract new GST because GST was recognised on the purchase price. Lease residuals/end-of-term purchase usually do include GST.
Can I claim GST on used assets?
Only if GST is charged (supplier is GST-registered and not using the margin scheme). If there’s no GST on the invoice, there’s no input tax credit to claim.
Are there limits for cars?
Yes. Input tax credits for passenger cars are subject to the ATO car limit and, in some cases, Luxury Car Tax. Business-use percentages also apply.
What if I need 100% funding including GST?
Many lenders will fund GST and set a deferred GST repayment to line up with your next BAS, particularly for chattel mortgage or hire purchase. Availability depends on profile and asset.
Final takeaway
For no deposit asset finance in Australia, GST outcomes depend on the finance product, your GST registration and business use, and your BAS method. No deposit mainly affects cash flow at settlement. Choose the structure that fits your BAS timing and end‑of‑term goals, then document clearly to keep approval smooth.