By Phil Ringuet
Want to get the tax man to help you buy business equipment?
With the end of the financial year fast approaching, now is a great time to purchase a work vehicle or equipment for your business. The Federal Government passed legislation last year to extend and increase the instant asset tax write-off for small businesses. That means if your business is eligible, you could potentially make several purchases up to $30,000 each this financial year, then claim the expenses back on your next tax return – and get the tax-man to help you pay for it!
We’re happy to work with you and/or your accountant to maximise your business cash flow and tax advantages, whatever these may be. We have access to a very wide variety of lenders who offer multiple ways to finance the business items you need.
Here are some popular business equipment finance options to give you a general idea of how we can help.
The great thing about leasing is that you can access the latest equipment and vehicles with no capital outlay. The lender retains ownership of the asset and you lease it back from them at a fixed monthly payment. Once the lease is up, you can choose to pay a ‘residual payment’ and buy the asset, then potentially trade it in and upgrade to a newer version. Another option is to refinance the residual and continue leasing.
- You’ll know what your payments are and can manage your cash flow accordingly.
- You may be able to claim the lease payments as a tax deduction (speak to your accountant).
- There could be other tax benefits, including potentially making advance lease payments for tax or cash flow purposes (again, it’s best to consult your accountant).
- You may be entitled to claim a GST credit for the GST included in each lease payment.
- There’s flexibility to reduce the size of your payments by increasing the residual amount at the end.
- You can keep your assets up-to-date and some equipment leases can potentially include a service contract.
In addition to finance leases, there are also operating lease agreements. This is when you don’t take on the obligation to pay the residual value at the end. The asset is simply handed back to the lender.
Again, a hire purchase allows you to obtain the latest equipment and vehicles for your business, whilst preserving your cash flow. With this finance option, the lender purchases the equipment or vehicles you require, then hires it to your business for a specific period. It’s like a finance lease, but when the final payment is paid, your business immediately owns the asset.
- Won’t tie up your cash
- Generally, doesn’t require additional security
- Depreciation and interest on any lease repayments may be tax deductable (check with your accountant)
- You own it at the end of the hire period.
A chattel mortgage is another type of finance option that works well for businesses. The financier secures the loan using the “chattel”, or the vehicle or equipment you purchase. You take ownership of the asset, and the mortgage is registered with ASIC. Once the loan is paid off, the mortgage is removed, and the vehicle or equipment is officially yours.
- If you’re registered for GST on a cash basis, you may be able to claim the GST in your vehicle’s price up-front through your next Business Activity Statement (BAS), (check with your accountant).
- GST is not payable on your repayments
- You may be able to claim depreciation and the interest charges on your chattel mortgage as a tax deduction (again, consult your accountant)
- Lower interest rates generally apply as finance is secured against the asset
- You may be able to decrease your regular repayments by paying a deposit upfront, trading-in a vehicle, or opting for a balloon payment at the end of your loan term
- You can manage your business cash flow more effectively.
Loans and other finance options
In addition to these popular ways to finance vehicles, machinery and equipment for your business, we can also offer a wide variety of business loans – both secured and unsecured. These can be used for anything from equipment purchases to inventory control and cash flow management.
Whether your business finance needs are straightforward or more complex, we can help you find the right solution. Our business lender panel includes peer-to-peer lenders, private funders and major banks. Best of all, we offer fast turnaround times – we could potentially get your finance approved in as little as 48 hours*.
Remember, EOFY is sale time for vehicles, IT, machinery and equipment – so there may also be bargains to be had. Contact us today and we’ll get the ball rolling on your finance in plenty of time to make your purchases before June 30.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.