Hire Purchase & Chattel Mortgage

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Hire purchase is a form of finance which is again targeted to self employed clients. Generally they are for the purchase of motor vehicles (but are not restricted to). Only the interest payments on the monthly repayment are a tax deduction. However GST can be claimed every quarter over the term of the contract as GST is calculated into the loan repayment.

Chattel mortgages are the same as Hire Purchase agreements with the main difference being that you are able to claim the entire GST component in the first quarter opposed to over the term of the loan.You are also able to claim depreciation over the term of the contract for both Hire Purchase and Chattel Mortgages.

Leasing is generally better from a taxation point of view if it is a short term proposal. Whereas a Hire Purchase/Chattel Mortgage usually offers more deductions if the asset is held for a longer period of time due to being able to claim interest, depreciation and GST.