Call: +61 3 9802-5288
click to email
or fax: +61 3 9803-8296
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What option is best for your business*?
(Tax treatment may vary according to your personal circumstances.
Please consult your accountant or tax agent.)
Commercial Hire Purchase
A Commercial Hire Purchase (CHP) agreement is a contract to purchase equipment on a set term with a fixed rate. Ownership of the equipment is transferred once the final payment has been made. Security is taken over the equipment financed leaving your property free for other lending. With each repayment you are increasing your
equity in the equipment. Commercial Hire Purchase is ideal for a business that wants full ownership at the end of the term.
Advantages of a CHP are:
- Freedom to reduce the amount financed using a deposit, or you can finance 100% of the asset cost
- Option to structure the transaction with a balloon or fully amortise the finance
- Tax benefit through interest paid and depreciation on the equipment*
Chattel Mortgage
A Chattel Mortgage is a fixed rate loan for the purchase of business equipment. The equipment belongs to the client and the loan is secured by the lender who lodges a charge over the equipment. A Chattel Mortgage is best for those businesses who are running on a “cash” basis for GST. In contrast to a CHP contract, under a Chattel Mortgage the GST on the purchase can be claimed
on your next BAS claim.
The advantages of a Chattel Mortgage are:
- You own the equipment through the term of the agreement
- Freedom to utilise a deposit or finance 100% of the cost
- Tax benefits through interest paid and depreciation on the equipment*
Finance Lease
A finance Lease requires the lessee to finance 100% of the asset cost, i.e. a deposit can not be utilised to reduce the amount financed. A residual value, which is payable at the end of the term, must be established. Residual values are determined by the Australian Tax Office and are based on the depreciation value of the asset.
The advantages of a Finance Lease are:
- No initial cash out lay as 100% of the purchase price is financed
- Rental payments are fully tax deductible*
Novated Lease
A Novated Lease product can benefit both the employer and employee.
- It provides the employer with a complete salary packaging alternative to owning a fleet of motor vehicles
- The employee gains full use of salary packaging
- Documentation comes complete with ATO and accounting standards clearance
Novated Leasing is an arrangement that is used to combat the differing needs of employers and employees and provides a solution that will benefit both parties.
Have you considered taxation, GST and FBT implications associated with these products?
For the option that best suits your needs please do not hesitate to contact our office.
* Tax treatment may vary according to your personal circumstances. Please consult your accountant or tax agent.
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Please call: +61 3 9802-5288; Fax: +61 3 9803-8296; or click to email
for finance and leasing assistance.
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