Hi
Does anyone have any info on a “Chattel Mortgage” ? How does it work ?
Any info appreciated ??Regards
“Do not follow where the path may lead. Go instead where there is no path and leave a trail” Ralph Waldo Emerson
Chattel Mortgage
Also called bill of sale.
I have machinery that I have purchased under a bill of sale for my business. Payments over 5 years and title to it at the end.
My accountant advised me to do it this way because of the GST implications.
No doubt there are others here who can explain better.
What are you looking at doing
Cheers
PurseOld Bill of Sale……….
Interesting.
Well my partners accountant advised to purchase a new vehicle for the business under this method.
And to pre pay 12 months worth of payments. ??
I honestly hadnt heard of this term before.
He was thinking of paying outright cash for the car. The business being financial etc. Im sure the loan institution would be collecting some fees then.?? What does this have to do with the GST component was this explained to you??Regards
“Do not follow where the path may lead. Go instead where there is no path and leave a trail” Ralph Waldo Emerson
Hi again Jancrows
I was hoping someone smarter than me would have posted a reply by now.
Perhaps they are all out looking at property this morning??
Sounds to me like your partner needs to talk to his accountant and ask a few more questions.
Genarally speaking it is cheaper to pay cash for equipment but i think it depends if you want title to it at the end too.
I have had the GST isse explained but you really need your accountant to guide you.
I still have an old copy of “Making More Money” by Noel Whittaker and he explains it as being similar in concept to a lease with the main difference being you have title to it at the end.
Hope that helps
PurseA Chattel Mortgage is a loan facility. You own the asset, but the financier takes a consideration over the asset until the contract is paid in full. With a Chattel Mortgage, you can optimise your cash flow while minimising the impact of GST, which is not payable on individual repayments, as is the case with leasing.
If your business is registered for GST, you will be able to claim the GST portion of the purchase as an input tax credit (ITC) immediately, to the extent the goods are used for creditable purposes.
Alternatively, you have the option of funding the GST portion of the invoice price as part of the loan amount and have the loan structured to allow you the ITC as a payment after the next BAS is lodged and credit received.
Hope this helps.
Rgds.
Lucifer_auThanks Lucifer.
I will pass this info on.
I am in the process of learning a host more info on business operations at present. Like most things its an interesting area particulalry GST implications etc. and the vast array of financing and differing business structures…give me 12 months and I will have a bit more knowledge in this area to hopefully share/assist others.Thanks again
Regards
“Do not follow where the path may lead. Go instead where there is no path and leave a trail” Ralph Waldo Emerson
The ATO provides no guidance whatsoever on chattel mortgages. (I dont think they know what they are)
IN relation to GST treatment, similar to a HP except that you can claim the GST up front regardless of whether you account for GST on a cash or non cash basis
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