Leasing

A leasing contract is simply a rental agreement between the lessee and the owner of the equipment for a predetermined period of time. If the equipment is used solely for earning assessable income, the payment will usually be fully allowable for tax deductions. Citywest Accountants are a specialist in leasing finance, and we can help you if you have a need for leasing finance.

Broadly speaking, there are two main types of leases:

1.  Finance Lease
This is the most common form of leasing, and is one where most of the risks and benefits of ownership of the equipment are transferred to the lessee, although the financier still retains legal title.

2.  Operating Lease
This kind of lease is one where the financier has the risk and benefits of ownership, while the lessee has the possession and use.

At Citywest Accountants, our panel of financiers offer a broad range of specialist asset financing options, including:

Fleet Leasing
This is a facility for the management of vehicle fleet, with the option to include a full maintenance programme. It is suitable for businesses with more than five vehicles.

Novated Leasing
This is specifically designed for the financing of motor vehicles as part of an employee’s salary package. The employer deducts lease payments and other vehicle-related expenses from the employee’s pre-tax income. On the cessation of employment, the lease reverts to the employee. FBT is payable on a concession basis determined by the value of the vehicle and the kilometers traveled in any one year.

Hire Purchase
Hire purchase is treated much the same as a reducing bank loan. The full monthly payment is not an allowable tax deduction, however, interest charged will generally be deductible. Depreciation based on the total cost of the equipment may also be claimed as an allowable deduction from the date the equipment is ready to use.

At the end of the lease period the financier has the right to take possession of the equipment and sell it on the open market. In practice however, the financier will usually accept an offer from the lessee to purchase the equipment at the residual value.

Under hire purchase, ownership of the equipment is automatically transferred to the borrower upon final payment. With a lease, as mentioned already, ownership of the asset does not transfer automatically at the end of the term.

Chattel Mortgage
Chattel Mortgage is similar to hire purchase except that this type of financing gives the borrower immediate ownership of the asset.

For more information on our Leasing, or any of our financial services, you can ring us on (02) 9680-0131. Alternatively, you can book a FREE Consultation, by using our Online Enquiry Form.