News & Views
Thank you for supporting a great cause
Cindy recently participated in the MS Walk + Fun Run, which raises funds to assist over 23,000 Australians affected by Multiple Sclerosis. As a member of ‘Team Becks’, thanks to the support of our wonderful clients, friends and family she raised almost $1,000. The team tally sits at over $7,000, which is an amazing result. ‘Team Becks’ proudly braved the winds and rain on Sunday 2 June in support of dear friends who are living every day with the effects of this disease. It’s not too late to support Cindy and contribute to this important cause. Click...
read moreEnd of Financial Year – a great time for finance!
While arranging finance is a beneficial business option at any time of the year, why not take advantage of the EOFY deals? Many businesses are looking to maximise sales and reduce their stock, meaning fantastic offers are available leading up to June 30. Our team can help you get the finance you need to bag that bargain – fast! Another Successful Venture It has been a pleasure assisting Riccardo Roberti again with a new venture: Stellini’s Pasta Bar, located at the University of NSW campus. Benson Leasing organised the funding for the entire kitchen fit-out and Point-of-Sale equipment, and we were thrilled to hear that the queues were twenty deep on opening day, all day! Riccardo has already established the award-winning Blackwater Restaurant, with spectacular views over the Georges River. The restaurant serves rustic southern Italian dishes which showcase home-grown Australian produce. We wish Riccardo every success. Vendor Feedback Benson Leasing has built strong business relationships with many vendors throughout Australia. One of our valued vendors, Mobile Masters, who are located in Western Australia and specialise in communications equipment, recently sent some positive feedback for which we are so appreciative. “Thank you Cindy, it is great working with you as you are always so helpful”. Yvonne Sharp, Mobile...
read moreWhat is a fully Maintained Lease?
A Fully Maintained Lease takes care of all your routine car expenses. Under a Fully Maintained Lease, a nominal amount is deducted from each salary or wage payment to cover your car lease, your car’s running costs, and any FBT payable. If the amount allowed for your car’s running costs is more, or less, than the actual cost, the additional funds may be refunded to you, or you may need to make a top-up payment. Fully Maintained Novated Lease arrangements commonly include, car servicing and maintenance, accident management services, a fuel card for fuel purchases, roadside assistance, and registration renewal. A Fully Maintained Novated Lease is a convenient way of organising all of your car-related expenses at once, and knowing in advance that running costs are taken care of – never worry about servicing or registration again. In contrast, Non-Maintained Novated Leases , or “finance only” Novated Leases allow you to take advantage of potential tax savings through salary packaging and still retain control of your fuel purchases, servicing, maintenance and other running costs. Only the set lease costs of your car are deducted from your salary or wage payments. All other costs are paid by you as they fall due. Is Fully Maintained Novated Leasing right for me? Whether you’re a business or an employee, a Fully Maintained Lease represents an attractive choice for tax benefits, flexibility and management of the vehicle throughout its lifetime. This not only takes away the headache and burden of running a fleet, but it collates all vehicle expenses as one expense item, leaving you time to get on with what you do best, running your...
read moreResidual Value
Every car lease has to contain a residual, the residual is the lump sum owed to the financier at the end of a loan’s term and is expressed either as a dollar value or a percentage of the amount borrowed. The residual value is tightly controlled by the ATO and must reflect what the vehicle value at the end of the finance term. Unlike and Hire purchase or a chattel mortgage it cannot just chosen to suit your payments or cash flow or simply be nil/nothing at the end. To sum up a simple car lease is not as common as its name and is the least type of business car finance used with sole traders, partnerships or small business owners, unless you’re big business, publicly listed company or government entity you would most likely favour a fully maintain lease which we will go into detail in the next...
read moreCar Lease
Further on our series on car finance we come to one of the most well- known type of funding called “The Car Lease”. Believe it or not most people say and think they have a “Car Lease” when in fact they have a Hire Purchase, Chattel Mortgage, which is very popular. Car leasing is when the car is for business use and carries certain tax benefits, making it an attractive option for some. If the car is for private use there is no point in leasing. The costs can be about the same as for a car loan but the exit penalties are much higher and interest is calculated in an old fashioned way. Which means any overpayments made will not reduce the total interest cost. GST is charged on the monthly lease payment and on the residual value at the end of the lease. Where the customer is registered for GST, they can claim some or all of the GST contained in the lease payment and the residual value as an input credit on their next Business Activity Statement....
read moreCommercial Hire Purchase v Chattel Mortgage
As a follow-on from last month’s newsletter, this month we focus on Commercial Hire Purchase v Chattel Mortgage on Motor vehicles. What is a Hire Purchase? Hire purchase finance is an agreement between you and the lender to acquire a motor vehicle for your business. During the hire period, the lender legally owns the car and you pay regular instalments to the finance company. For tax purposes you can claim depreciation, running costs and interest paid, against your business income. When you pay off the loan in full, legal ownership is then transferred to you. What is a Chattel Mortgage? Chattel mortgage is essentially a mortgage over goods to be financed. Chattel mortgage is classed as a cash sale in that the goods automatically become your property on purchase and the finance company takes a mortgage over the chattels. Just as a hire purchase you can claim depreciation, running costs and interest paid, against your business income. The chattel mortgage allows businesses to claim the full input tax credit from GST incurred expenses immediately (next BAS statement). Those using their motor vehicles for business purposes can take out a hire purchase loan or chattel mortgage but will have to keep a log book and document the percentage of the vehicle use that is for business, which is tax-deductible. The terms of both products are essentially the same, including the balloon payment at the end, but the chattel mortgage has overtaken popularity over hire purchases since the introduction of GST and the Business Activity Statement (BAS). Here’s the twist As of July 1 2012 new GST rules have come into play. Customers will now pay GST on the interest charged for the hire purchase term and this GST is payable at settlement. Of course, as long as you are registered for GST and the asset being purchased is for business use, then this GST will be claimed back as an input tax credit on the next BAS so the net effect is nil. The other important change that came into effect is that the GST can be claimed back immediately even for customers on cash accounting. Previously, if a client is on cash accounting, then the GST paid for an asset on hire purchase must be claimed progressively over the term of the hire purchase in proportion to the principle reduction made with each payment – in other words, an accountants worst...
read moreNovated Lease
This month we focus on the Novated lease and how savvy employers and employees are using it as a tool to negotiate a salary package, with winners on both sides. Novated leasing is growing in popularity and in many cases is the only choice made available to employees wishing to have a car as part of their employment package. But be aware that this is only available at the employer’s discretion. What is a Novated lease? A Novated lease is salary sacrificing to purchase a car for private use only. Under the terms, an employer agrees to make the car repayments out of a worker’s pre-tax salary. What taxes are imposed? Fringe benefits tax (FBT) is payable but the good thing is the FBT is less than the income tax that would have been paid. (Minimising your tax) Is a Novated lease for everyone? The short answer is NO. “If you’re not doing many kilometres and you don’t have a reasonability high income, It’s probably not going to work for you, because the income tax you’d save would be outweighed by FBT . However higher earners and high-mileage drives can do you very well. What happens at the end of the lease term? A Novated lease always has a balloon payment at the end, which is tightly administered by the Australian Tax office. The ATO sets certain sums as minimums as borrowers need to avoid a bill greater than the car’s worth at the end of the lease. Why is it good for the employee? Usually if you are given a car as part of your employment package you have no choice of what you drive. It may have done many kilometres and previously been mistreated by former grubby employees. With a Novated lease the employee has a choice of which vehicle they drive and to top it off they get equity in their motor vehicle investment. What if the employee leaves their job? This is the best part for the employer, its portable so if the employee leaves the job they take the car and the debt with them. No more having a car sitting around costing money with no one to drive...
read moreAustralia and the USA – The Fiscal Cliff
Here we are in 2013 – even before the year began (late last year in fact) and to be more precise, three hours before the midnight deadline on January 1, the US Senate agreed to a deal to avert the ‘fiscal cliff‘ (a ‘political tripwire’ set in place by Politicians where the position is such that the rate of money flowing out is greater than the amount flowing into the Government pot, generally due to Congress bills passed, and thus accumulating an unmanageable debt). The Senate version passed two hours after the deadline, and the House of Representatives approved the deal 21 hours later. The government technically went ‘over the cliff’, since the final details weren’t hashed out until after the beginning of the New Year, but the changes incorporated in the deal will be backdated to January 1. The fiscal cliff agreement is good news to some extent but an unnecessary, self-inflicted burden on the economy and financial markets. Basically, it’s a package which reversed tax cuts, agreed on a small increase of tax – stopping the need to impose big income tax increases, and increased investments tax, and minimised the need to exercise large cuts in spending for the pentagon and...
read moreThe Fiscal Cliff – what does it mean for us as Australians?
Some people think that we are shielded by anything happening in the US by our proximity to Asia and in particular by China, our largest trading partner. This is not correct. The world is a very small place and the USA is still a very important country when it comes to global economic policy and in particular Australia. Our top ten trading partners are China followed by Japan, USA, Singapore, United Kingdom, Korea, New Zealand, Thailand, Germany and Malaysia. So as you can see the USA is a very important partner to Australia and to the Australian economy. The fall of the USA over the ‘fiscal cliff’ would essentially create a recession in the USA, and conversely would mean that obtaining finance by corporations and Small and Medium Businesses (SME’s) will become more difficult due to less money being available to loan; the cost of imports from our top trading partners would increase; and the general share market would become shaky. We are already into a new year and with a new year come’s a new optimism. Optimism is the true backbone of the economy and that is what the markets rely on. Never the less we still have to get up in the morning, go to work, pay our bills and get on with it. Most of us believe that after every bust there’s a boom and it’s worth the...
read moreFeatured Business (January) – WebSOS.com.au
WebSOS are a talented group of web design professionals working together to allow small businesses to grow online by delivering great design solutions at inexpensive prices. Their experienced creative team will guide you through the steps needed to deliver you an eye-popping, high-performing, user friendly small business website – all for a price that will put a smile on your dial. Contact Jeff or Sam from WebSOS to ask how they can help your business today....
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