Image courtesy of Pixomar/ FreeDigitalPhotos.netChattel Mortgage

A chattel mortgage is a common loan arrangement in Australia for companies, partnerships, and sole proprietorships to finance the purchase of business equipment, cars, and other commercial vehicles. ATO rules mean there are certain GST benefits to chattel mortgage holders, but stamp duty may also apply in some states.

Under a Chattel Mortgage the financier advances funds to the customer to purchase the equipment (the chattel), and the customer takes ownership at the time of purchase.

The financier then takes a “mortgage” over the equipment as security for the loan, by registering a Fixed and Floating Charge with ASIC. Once the contract is completed, the charge is removed giving the customer clear title.

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