EV Chattel Mortgage

What is an EV chattel mortgage?

An EV chattel mortgage is a secured business loan where you own the electric vehicle immediately, while the lender holds a mortgage (charge) over it until the loan is repaid. It is the most commonly used business vehicle finance structure in Australia, giving you full control of the asset from day one along with the tax benefits of ownership.

Unlike a lease where you don't own the vehicle during the term, a chattel mortgage makes you the legal owner from the start. The vehicle appears on your balance sheet as an asset, allowing you to claim depreciation, and you can claim the GST immediately if your business is GST registered.

Key benefits

• Immediate Ownership: You own the EV from day one, giving you full control over the asset
• Claim GST Upfront: If GST registered, claim the GST component on the full purchase price immediately
• Depreciation Benefits: Claim depreciation on the vehicle value as a business expense
• Interest Deductions: Interest payments are tax-deductible business expenses
• Flexible Terms: Finance periods from 1-7 years with balloon payment options
• Lower Running Costs: EVs have significantly lower fuel and maintenance costs than traditional vehicles

Who is an EV chattel mortgage for?

An EV chattel mortgage is ideal for:

• Businesses with an ABN and 6+ months trading history
• GST-registered businesses wanting to claim GST upfront
• Companies wanting to own their business vehicles
• Businesses planning to keep the vehicle long-term
• Fleet operators purchasing multiple electric vehicles

Eligibility at a glance

• ABN: Active for 6+ months (some lenders accept newer ABNs with supporting financials)
• Business use: Vehicle must be used for business purposes, at least in part
• Trading history: Most lenders want to see at least one full BAS period or set of financials
• Credit history: Clear or explainable credit history for the business and its directors
• Deposit: Not always required, but a deposit can improve your rate

Eligibility varies by lender. A broker can tell you within minutes which lenders are likely to approve your specific business.

Documents your lender will ask for

Having these ready speeds up approval:

• ABN and business registration details (ASIC extract for companies)
• Proof of identity for all directors/guarantors (driver licence or passport)
• Recent BAS statements (typically the last 1-2 lodged)
• Business bank statements (usually the last 3-6 months)
• Vehicle details - a tax invoice or quote from the dealer/seller
• Financial statements - may be requested for larger loan amounts or newer businesses

Exact requirements depend on the lender, loan amount, and how long your business has been trading. A specialist broker can confirm the shortest document list for your situation before you apply.

Balloon payment options

A balloon payment (residual value) can reduce your monthly repayments by deferring part of the vehicle's cost to the end of the term. Unlike a lease, a chattel mortgage balloon is not set by the ATO — it's a commercial term set by your lender, and maximum amounts vary between lenders and credit policies.

Many lenders use the ATO's minimum lease residual value schedule (Taxation Determination TD 93/142, which applies to leases) as an informal reference point when setting maximum chattel mortgage balloons, but it isn't a rule that governs chattel mortgages directly. As a guide, that schedule sets these minimums for leases:

• 1 year: 65.63%
• 2 years: 56.25%
• 3 years: 46.88%
• 4 years: 37.5%
• 5 years: 28.13%

Your actual maximum balloon depends on the lender, loan term, and the vehicle. It should reflect a realistic estimate of the vehicle's value at the end of the term — a balloon set too high risks a shortfall if the vehicle is worth less than the balloon when it falls due. Electric vehicles typically hold their resale value well, which makes a balloon worth considering; talk to your broker about the balloon options available from lenders on our panel.

Tax implications

Understanding the tax treatment of a chattel mortgage helps you maximise your benefits:

GST

If your business is registered for GST, you can claim the GST component (1/11th of the purchase price) on your next Business Activity Statement, even though you're financing the vehicle. This claim is capped at 1/11th of the ATO's car limit for the year - $6,353 for 2026-27 - regardless of how much the vehicle actually costs.

Depreciation

You can depreciate the vehicle using either:

• Prime Cost Method: Depreciate the same amount each year
• Diminishing Value Method: Higher depreciation in early years (typically more beneficial)

Electric vehicles have a useful life of 8 years for tax purposes. Depreciation is also capped at the car limit ($69,883 for 2026-27), though instant asset write-off provisions may apply for eligible businesses.

Interest deductions

The interest portion of your repayments is tax-deductible as a business expense. Your lender will provide an annual statement showing the interest paid.

Running costs

If the EV is used for business purposes, you can also claim:

• Electricity/charging costs
• Insurance premiums
• Registration and CTP insurance
• Maintenance and repairs

Example: how much can you save?

Scenario: A GST-registered business purchases a $70,000 Tesla Model 3 with a chattel mortgage. This price exceeds the 2026-27 car limit of $69,883, so the GST and depreciation claims below are based on the capped amount, not the full purchase price.

Immediate GST Refund:
GST component: capped at $69,883 ÷ 11 = $6,353
This is claimed back on the next BAS.

Annual Depreciation:
Using diminishing value method over 8 years, first year depreciation is calculated on the capped value ($69,883 ex-GST equivalent), giving approximately $17,470 (25% rate). At a 30% tax rate, this deduction saves approximately $5,241 in tax.

Interest Deductions:
With a 7% interest rate on the full $70,000 financed (interest deductions are not subject to the car limit), first year interest might be approximately $4,500, which is fully deductible. At a 30% tax rate, this deduction saves approximately $1,350 in tax.

Total First Year Benefit: $6,353 (GST cash refund) + $5,241 (tax saved on depreciation) + $1,350 (tax saved on interest) = approximately $12,944, significantly reducing the effective cost of the vehicle.

Note: This is a simplified example that separates the immediate GST cash refund from the tax saved on deductions (deduction amount × your marginal/company tax rate, not the deduction amount itself). Actual tax benefits depend on your individual circumstances, business use percentage, business structure, and tax rate. Consult your accountant for specific advice.