Whether you're buying a vehicle, upgrading machinery, or investing in IT infrastructure, the finance structure you choose has real implications for tax, cash flow, and your balance sheet.
- Chattel mortgage puts the asset on your balance sheet from day one — you own it and claim depreciation.
- Finance lease keeps the asset off your balance sheet — lease payments are fully tax-deductible.
- The instant asset write-off can make the timing of equipment purchases highly tax-effective.
- Match the finance term to the useful life of the asset — never longer.
Whether you're buying a vehicle, upgrading your IT infrastructure, or investing in manufacturing equipment, the way you finance it has meaningful implications for your cash flow, tax position, and balance sheet.
Option 1: Chattel Mortgage
A chattel mortgage is the most common equipment finance structure for business use. Your business takes ownership from day one, you claim GST upfront in your BAS, and you depreciate the asset. Interest is tax-deductible. Best for: businesses registered for GST that want to own the equipment.
Option 2: Finance Lease
The lender purchases the equipment and leases it to your business. Lease payments are fully tax-deductible. GST is claimed on each payment. Equipment doesn't appear on your balance sheet. Best for: businesses that want to preserve capital or upgrade equipment regularly.
Option 3: Hire Purchase
The lender hires the equipment to you with an option to purchase at the end. GST claimed upfront. Interest and depreciation are deductible. Best for: businesses that want eventual ownership with flexibility.
Quick Comparison
| Feature | Chattel Mortgage | Finance Lease | Hire Purchase |
|---|---|---|---|
| Ownership from day 1 | Yes | No | No (option at end) |
| GST claimed | Upfront | Per payment | Upfront |
| On balance sheet | Yes | No | Often |
| Depreciation claim | Yes | No | Yes |
Don't Forget the Instant Asset Write-Off
Check ATO's current small business tax concessions for current thresholds and eligibility on the instant asset write-off.
ABN and Business Vehicle Finance
If you're financing vehicles for your business — from a single ute to a fleet of vans — ABN car finance via a chattel mortgage is one of the most common uses of this structure. Many lenders can approve business vehicle finance quickly, often with minimal documentation for amounts under $100,000.
How We Help
At Wiseman Financial Solutions, we compare equipment finance and asset finance options across specialist lenders. Many approvals come through within 24 hours. For broader business finance needs, see our business lending service page. Contact us for a fast, obligation-free equipment finance quote.
Frequently Asked Questions
Can I get equipment finance as a sole trader?
Yes. Sole traders can access equipment finance, though some lenders have higher thresholds or documentation requirements. Income evidence requirements vary by lender and loan size.
Is there a minimum loan amount for equipment finance?
Equipment finance is available from as little as $5,000 with some lenders. There's no practical upper limit for large commercial equipment, though amounts over $1 million require more detailed assessment.
