Are you looking for Asset/Finance Lease?
A finance or asset lease allows you to have the use of business equipment and benefits of ownership, whilst the financier or lender retains actual ownership of the equipment.
In return for funding and owning the business equipment, the financier or lender received a fixed monthly rental payment for the agreed term of the lease.
Asset and finance leases are commonly referred as car leases, auto leases and vehicle leases.
What are the benefits of Asset/Finance Lease?
- Flexible term contract
- Fixed interest rate
- Fixed monthly lease rentals
- Costs are known in advance
- A residual can be applied to a lease, lowering monthly payments
- Your equipment does not sit “on your books” as an asset/liability.
- Tax deductions for the lease payments can be claimed
- As the GST contained in the vehicle’s purchase price is claimed back by the financier, only the equipment’s price excluding GST is financed, lowering monthly payments
- Ability to make advance lease payments for tax deduction or cash-flow purposes
What are the tax implications of an Asset/Finance Lease?
GST is charged on the monthly lease rental and on the residual value at the end of the lease. Where you are registered for GST, you can claim some or all of the GST contained in the lease rental and residual value as an input credit on their next Business Activity Statement. The customer can claim the lease rentals as a tax deduction.