Finance Lease

Is a Finance Lease suitable for me?

Financier owns the vehicle/asset and “rents/leases” it to the client who has no title but accepts the residual value risk. The financier claims the input deduction for the GST, and the client pays (and claims) GST on top of the monthly lease rentals.

As the asset is being rented/leased with any resulting "equity" jeopardizing your tax return, strict guidelines apply to residual values. Also, cash deposits or trade-in equity are not allowed. Leasing can be quite inflexible on occasions.

In certain circumstances the ability to "pre-pay" lease rentals can increase your tax deductions in a particular period.

With certain low value equipment with a high depreciation rate a finance lease contract may result in a lower applicable interest rate.