Equipment & Plant Finance

Benson Leasing can provide several different types of equipment and plant financing:

• Rental Finance / Operating Lease is off balance sheet borrowing – the most commonly used finance for business equipment. Rental finance will eliminate cash restraints that exist when making that vital purchasing decision, by not having to pay the total amount of the goods up front. Instead, the first month’s payment is all that is required for your business to have that equipment NOW, that will benefit your business for years to come. The monthly instalment can (in most cases) attract a 100% tax deduction, which equates to a minimal daily investment. Fixed terms of 24, 36, 48 or 60 months are available.

• Hire Purchase / Commercial Hire Purchase is a legal obligation between the finance provider and the hirer (the client) where the amount repayable is calculated on a fixed term, with or without a balloon payment at the expiry of the term. The hirer has ownership of the goods at the beginning of the term.  When accounting for a hire purchase the asset and liability is disclosed on the balance sheet.  The allowable tax deductions are based on depreciating the asset and the interest component of the payment – in most cases.

• Finance Lease is owned by the finance company until the residual payment is made, then ownership is transferred.  The residual value is mandatory on leases. Lease payments are 100% tax deductible. Leasing is ‘On Balance Sheet Borrowing’ with payments and interest listed as a liability and the worth of the goods as an asset. A lease is classed as capital expenditure on a business’ balance sheet and must be accounted for in the “Capital V’s Debt” account, as it is an investment.

• Chattel Mortgages are commonly used by companies, partnerships and sole traders to fund the purchase of cars, commercial vehicles and other business equipment. Legal ownership of the chattel is transferred to the purchaser at the time of purchase, and the mortgage is removed once the loan has been repaid. Under Australian Taxation Office rules, businesses that account for GST on a cash basis are entitled to claim an Input Tax Credit for all of the GST contained in the purchase price of the chattel on their next Business Activity Statement. Repayment of chattel mortgages in most Australian states attract stamp duty.

Disclaimer: All information regarding Allowable Tax Deductions above, is given as General Advice.  Independent advice from your Tax Professional should be sought in relevance to your individual circumstances.