• You can claim the rental payments
as a tax deduction*, making this
one of the most tax-effective
financing options available.
Finance lease
The financier purchases the equipment
on your behalf, and you then pay them
a fixed monthly lease rental for the
term of the lease.
At the end of the lease, you have a
number of options available:
1. Re-lease the equipment for a
further period.
2. Trade the goods in on new
equipment.
3. Return the equipment to the
lessor, but any loss is indemnified
by you.
4. Make an offer to purchase the
goods, but any loss is indemnified
by you.
Benefits
• Working capital can be preserved.
• Able to write off the net
repayment. Business test applies
(an ATO tax term).
• Fixed repayments due to fixed
interest rate during contract term.
• Flexibility, as structured payment
options may be available to
coincide with cash flow.
• Equipment may be able to be
maintained ‘off balance sheet’*
• Additional security usually not
required.
• A residual on the lease can help
lower monthly repayments, helping
to free up cash flow.
Although GST is charged on the monthly
payment and the residual value at the end
of the lease, if the customer is registered
for GST, they may be able to claim some
or all of the GST from the lease rental and
residual value as a credit on their next
Business Activity Statement (BAS).*
Chattel mortgage
Under a chattel mortgage, the financier
advances funds to the customer to
purchase