Boat Finance Business Boat Loans Chattel Mortgage Chattel Mortgage
A chattel mortgage occurs where a finance lender provides a loan or finance facility for the purchase of a boat that is predominantly for business use such as a charter boat or commercial fishing boat. Under a chattel mortgage the business becomes the owner of the asset at the time the agreement is entered into. The security for the chattel mortgage is provided by the financier registering a charge (a mortgage) over the boat until all monies owing are paid.
Taxation implications for a chattel mortgage
- A cash basis taxpayer for GST purposes is entitled to claim all of their input tax credits in relation to an acquisition using this finance option at the commencement of the arrangement. ie. If a taxpayer who accounts for GST on a cash basis acquired a $440,000 boat, then they would be entitled to input tax credits of $40,000 (i.e. 1/11th of $44,000) at the commencement of the agreement (i.e. in the BAS for that quarter)
- You can generally choose to finance all or just a portion of the purchase price and a more flexible residual option than leasing is normally available
- Cash basis taxpayers still retain their rights to depreciation in relation to the boat acquired under a chattel mortgage
- The interest component on the finance may also be claimable
Chattel mortgage terms
Terms generally range from 12 to 60 months (occasionally longer), repayments are made in advance and can be made monthly, quarterly, bi-annually, or yearly.
Who does a chattel mortgage suit?
A chattel mortgage may suit those who operate small to medium size enterprises, typically with an annual turnover of less than $2 million and use the cash method of accounting. Unlike a lease a chattel mortgage purchase provides some flexibility over the amount financed and the residual value. If you wish to to have an 'off balance sheet' type of loan or want to protect equity in your business be sure to investigate your boat leasing options. Attention again should be paid before signing a contract, that the term of the loan, the residual value and the monthly repayments are in line with your short and long term requirements.
Which boat loan option is right for you?
Deciding on the right Boat finance option for your situation can sometimes be confusing, Commercial Hire Purchase, Chattel Mortgage, Boat Lease are just a few of the boat financing options, Platinum Direct Finance can assist with your decision making and make the process simple and easy. Use our "Which boat loan product is right for you?" today!
Why use Platinum Direct Finance?
The Platinum Direct Finance group of companies will finance over 800 million dollars worth of equipment and car finance this year! Due to this volume and buying power, we can give our clients access to the best boat finance rates and boat financing products across Australia.
Need further information?
Either complete the friendly boat finance enquiry form and one of our boat finance experts will contact you shortly or talk to an experienced finance consultant on 1300 554 553.