A finance lease allows you to acquire the goods that you need now with the potential to receive a strong level of tax benefit coupled with end ownership of the equipment. This is a good form of finance for longer life assets that are core to the business – e.g. plant & equipment and vehicles.
A finance lease is a simplified form of finance which provides you with an easier way of administering your assets. Should the end residual be based on the ATO asset useful life guidelines, the payments may be a complete tax-deduction, simplying the need to depreciate the equipment and charge back the interest expense.*
Payments may be 100% tax deduction, depending whether the end residual is "tax-effective".
Payments are potentially treated as an expense that you run through your Profit & Loss Statement.
Is reported on your balance sheet as a debt or loan.
GST is claimed in each payment.
Finance 100% of the purchase price.
Finance the equipment cost only.
An end residual is set on the lease that once paid allows you to own the equipment.
*This information is not intended to constitute taxation advice and does not take into account your financial cirucmstances. Refer to your accountant for taxation advice.
Yes. At the completion of the agreement, a final residual balloon payment is made to purchase the equipment and the agreement is finalised.
The final residual figure under a Finance Lease is based on the ATO Depreciation guidelines for the useful life of the particular asset being financed. The residual figure is based on the term of the lease and what the asset's depreciated value will be at the end.
Generally any form of plant & equipment and tangible assets can be put onto a finance lease.
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