Chattel mortgage finance for Australian businesses
A chattel mortgage is one of the most common ways Australian businesses finance vehicles and equipment. You take ownership of the asset immediately, the lender holds a mortgage over it as security, and you repay the loan over a fixed term — often with a balloon (residual) lump sum at the end to keep monthly repayments lower.
Because you own the asset from day one, a GST-registered business can claim the GST input tax credit on the purchase upfront on its next BAS, rather than across the life of the finance. The interest is deductible to the extent the asset earns income, and the asset is depreciated under Division 40 — or written off immediately if it qualifies for the instant asset write-off.
What this calculator shows
- Monthly repayment and the balloon owing at the end of the term
- Total interest and total cost of the finance
- The GST input tax credit claimable upfront (capped for passenger cars)
- An indicative year-1 tax position — deductible interest plus depreciation, and an estimated tax saving at your tax rate
Cars vs commercial vehicles and equipment
The ATO car limit ($69,674 for 2025-26) caps both the GST credit and the depreciable cost for passenger cars (designed to carry under 1 tonne and fewer than 9 passengers). The maximum GST credit on such a car is $6,334. Vehicles designed to carry 1 tonne or more (most utes and trucks) and general equipment are not capped — choose "Commercial vehicle / equipment" for those.
These figures are 2025-26 ATO rules and are indexed or legislated year by year. This calculator provides estimates only and is not tax or financial advice — confirm GST credits and deductions with your accountant or the ATO.
Frequently asked questions
What is a chattel mortgage?
A chattel mortgage is a business finance arrangement where the lender advances funds to buy an asset (the 'chattel' — a vehicle or piece of equipment) and takes a mortgage over it as security. You own the asset from day one and the lender's interest is removed once the loan, including any balloon, is repaid. Because you take title at purchase, a GST-registered business can claim the GST credit on the purchase upfront.
How is the GST credit treated on a chattel mortgage?
If you're registered for GST and the asset is used for business, you can claim the GST included in the price (1/11th of the GST-inclusive price) as an input tax credit on your next BAS — regardless of the financing. For a passenger car the credit is capped at 1/11th of the car cost limit ($69,674 for 2025-26), i.e. a maximum of $6,334. Trucks, utes over 1 tonne and equipment are not capped. There is no GST on the interest component.
What's the difference between a chattel mortgage, a lease and hire purchase?
With a chattel mortgage you own the asset from the start, claim the GST credit upfront, and deduct interest plus depreciation. With a finance lease you rent the asset (GST applies to each payment) and typically deduct the lease payments. With hire purchase the financier owns the asset until the final payment transfers title. The best structure depends on your accounting method, cash flow and tax position — your accountant can confirm.
How does the balloon (residual) work?
A balloon is a lump sum left owing at the end of the term. It lowers your monthly repayment because you're financing less principal over the term, but you pay more interest overall and must refinance, pay out or trade in the asset to clear the balloon. Balloons commonly range from around 20% to 40% of the price and usually reduce as the term lengthens.
Can I claim depreciation and interest on a chattel mortgage?
Yes. The interest is tax deductible to the extent the asset is used to produce income, and the asset itself is depreciated under Division 40 (diminishing value or prime cost), or may be immediately deductible under the $20,000 instant asset write-off if your aggregated turnover is under $10 million and the asset is first used by 30 June 2026. For a passenger car, the depreciation cost is capped at the car limit. This calculator's tax figures are indicative only — confirm with your accountant.
Sources
Last updated: 1 June 2026