Commercial Hire Purchase (CHP)
Commercial Hire Purchase (CHP) is a commercial vehicle finance Sydney product. With CHP, the finance company purchases the motor vehicle on behalf of the client, and then allows use and possession of the vehicle (“hires”).
Regular (usually monthly) payments are required. At the end of the agreed term, and following payment of any residual or “balloon”, ownership is transferred to the client. The client can of cause, “trade-in” the vehicle, or refinance the residual. No GST is charged on the monthly repayments, or on the residual. Clients who are registered for GST on an accruals basis can generally claim the GST contained in the purchase price of the vehicle as an Input Tax Credit on their next BAS. When the vehicle is used for business purposes, under CHP tax deductions can be claimed for depreciation on the vehicle and interest charged on the loan.