AFN Equipment Finance

Basic Taxation Considerations
In the table below we have summarised some of the main points in relation to taxation and the various types of finance available.
The table is a guide only and is accurate as at the date of publication. You are strongly advised to seek the advice of your taxation adviser prior to making any finance decision.

	Finance Lease (1) & (2)	Commercial Hire Purchase (2)	Rental (3)
GST on Purchase	Lender	Lender	Lender
GST on Finance Contract	No	Yes	No
GST on payments	Yes	No	Yes
GST on Residual	Yes	No	N/A
GST on Refinance	Lender	Yes - new contract	N/A
Input Credits Claimable (4)	Yes - on rentals	Yes - pro rata	Yes - on rentals
Tax Deductions	Rentals	Interest / depreciation	Rentals
Software / Intangibles	HBOS / Capital Finance	Minimal	Yes
Minimum Transaction	$5,000	$20,000	$5,000

1) Residual Values - must be within ATO guidelines for depreciation and as such may be unrealistically high for items such as computers.

2) Software & intangibles - Other than for operating systems and basic components these items cannot be financed under a finance lease or CHP. Under an operating lease or rental the financier may consider stand alone contracts up to 25% of the value of the total purchase price.

3) Rental - Under the ATO guidelines the financier cannot offer the right of purchase at the end of term. The equipment must be returned. However, the financier will frequently enter into a buyback agreement with the vendor or a third party reseller who may offer a right to purchase.

Rates
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