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      02-03-2013, 04:06 PM   #16
pavo335's Avatar

Drives: 3.5 wheeler
Join Date: Feb 2012
Location: sydney

iTrader: (0)

Originally Posted by sparoz
Originally Posted by Bruno28 View Post
Oh, ok, thats lucky!
i guess it helps a lot.
I think you get confused a bit here - CHP is also known is Commercial Hire Purchase (same thing as corporate hire purchase depends on who they are marketing to) - it has nothing to do with corporate. Basically it is an arrangement were the ownership stays with the financer until all the payments (plus the balloon) has been made and ownership will be transferred to you. Someone can correct me if I am wrong, but if the purchase price of the car is less than the LCT threshold, then they are treated as a lease - ie the who repayment amount is deductible.

For us who tends to buy cars over the LCT threshold, the point of CHP is a bit redundant as any lease arrangement over LCT is treated as a loan, and hence we tend to take out a chattel mortgage where it is just like a regular loan, but it is guaranteed by the chattel (which is the car). The advantage is that you take ownership of the car straight away - which specifically in the GFC handouts, that's the only way we can do it to claim the extra write-off.

Usually the requirement for CHP is a declaration that it is for majority business use and you don't have to be a corporate or a business to access the product. I believe there is some change or tightening of law that the lender needed to satisfied that the car is going to be for business use if you are buying in your own name. I think there were some issues with some consumers who was offered the products and ended up learning the hard way that they are no longer protected by the consumer law, as CHP and Chattel Mortgage are both Commercial products.
I think your over thinking it. The only significant difference is

Chp - GST up front deduction
Lease monthly GST deduction