Commercial Equipment Loans
Options are available on commercial equipment loans that could be suitable for business use. There are a variety of products, each can be tax effective but are claimed in different ways. These are explained through this web site but it is recommended that you refer to the Australian Tax Office or your tax accountant.
Equipment Lease
The financier purchases the goods and provides a equipment lease arrangement back to you. In most cases there will be an arrangement to have the opportunity to own the equipment at the end of the term of the loan.
The financier being the purchaser will claim the GST component in the sale of the motor vehicle. The balance is then leased of which the payments are subject to GST (unless there is GST exemption).
Equipment Lease terms and residuals can be set by the Australian Taxation Office and these details can normally be provided by your equipment finance company, accountant,. or the Australian Taxation Department.
The interest rates are fixed with no option for a variable interest rate.
Repayments could be claimed as a deduction against taxation of the leaser. There could a limit to how many payments claimed in one financial year.
Equipment Loans , Chattel Mortgage
The Chattel Mortgage ,also known as a Bill of Sale is a equipment loan agreement suiting individuals, and big or small businesses.
You will be able to claim the GST component on the asset if you can claim GST. You can claim the GST on the purchase price of the vehicle (after purchase) through including it in your next BAS statement. This makes the Chattel Mortgage unique for equipment finance compared to most other arrangements.
As the owner of the equipment, you can claim the benefit of tax deductions if it is used for business use.
The financier holds a mortgage against the goods, though you possess the goods. This will normally be registered through ASIC.
The Australian Tax Office allowable depreciation and interest can be claimed as a tax deduction. GST is recoverable at the time of purchase, though not applicable to the monthly payments on your chattel mortgage equipment loan.
Equipment Finance - Commercial Hire Purchase.
A commercial hire purchase (CHP) a business loan, which the financier is considered the owner of the equipment and allows you to hire and possess and use of the goods in return for regular payments.
When the final payment is made and the loan is completed the title to the goods is transferred to the hirer.
Australian Taxation claims for GST could vary depending on the structure of which the business inputs their GST lodgment.
Deductions on income tax are from the interest paid in the commercial hire purchase (CHP) and an Australian taxation office method of depreciation on the goods.