A summary of your equipment finance options
| Features/Conditions | Finance Lease | Rental Finance | Commercial Hire Purchase | Specific Security Agreement (formerly Chattel Mortgage) |
| Who uses the product? | Limited use. Generally used based on accountants advice. | Generally used for financing high depreciating and/or high obsolescence equipment. (Such as IT, security and office equipment). | Generally used where guaranteed ownership of the equipment at the end of the term is required. | Generally used where You require ownership of the equipment during and at the end of the term. |
| What is it? | You choose the equipment you require. You make fixed lease payments to the Financier over an agreed term. | You choose the equipment you require. You make fixed rental payments to the Financier over an agreed term. |
You choose the equipment you require. You make fixed payments to the Financier over an agreed term. |
You choose the equipment you require. You make fixed payments to the Financier over an agreed term. |
| Term | Minimum 12 months. The maximum term is determined by the Financier based on the type of equipment to be financed. You should speak with us about the term required. | Minimum 12 months. The maximum term is determined by the Financier based on the type of equipment to be financed. You should speak with us about the term required. |
Minimum 12 months. The maximum term is determined by the Financier based on the type of equipment to be financed. You should speak with us about the term required. |
Minimum 12 months. The maximum term is determined by the Financier based on the type of equipment to be financed. You should speak with us about the term required. |
| Residual or Balloon ( this is the payment required at the end of the term based on an agreed % at the start of the finance arrangement) | The residual value percentage is generally based on the effective/useful life as determined by the Australian Tax Office*. You should speak with us about the Residual Value You require. | Not applicable to You. | You determine the balloon value percentage in conjunction with us and the Financier. You can have a nil balloon. | You determine the balloon value percentage in conjunction with us and the Financier. You can have a nil balloon. |
| Who owns the equipment during the term? | Legal Ownership with the Financier | Legal ownership with the Financier | Legal ownership with the Financier | You take ownership of the equipment at purchase and the Financier takes a charge over the equipment. |
| Flexibility during the term? (the ability to vary) | No | Yes. | No | No |
| End of term options | You can make an offer to purchase the equipment at the residual value. | You are required to return the equipment to the Financier. However, subject to the Financiers approval you may continue renting the equipment or place an offer to purchase the equipment. |
Ownership passes from the Financier to You once all payments have been made. | Legal Ownership remains with You. |
| What can be claimed as a tax deduction?* | You may be able to claim payments and stamp duty (if applicable in your State) as a tax deduction if the equipment is used for business purposes. | You may be able to claim payments and stamp duty(if applicable in your State) as a tax deduction if the equipment is used for business purposes. | You may be able to claim interest and depreciation as a tax deduction if the equipment is used for business purposes. | You may be able to claim interest and depreciation as a tax deduction if the equipment is used for business purposes. |
| What is the usual Accounting Treatment?** | On balance sheet. | Off balance sheet. | On balance sheet. | On balance sheet. |
| What is the GST treatment during the term of the finance option? | GST is payable on each rental payment and any residual value | GST is payable on each rental payment. At the end of the term if you make an offer to purchase the equipment and it is accepted GST is payable on the purchase Price | From 1/7/2012 GST is payable on the Term Charges (interest). This is payable upfront or may be financed during the term (subject to Financiers Approval). GST is not payable on the payments or on the balloon value. | GST is not payable on the payments or on the balloon value. |
“You” means the entity that finances the equipment
*Tax Treatment including the Goods and Services Tax (“GST”) can be a complex area and depends on your individual situation; we recommend that before making any decisions you seek independent advice from your tax adviser.
** Accounting treatment may change over time; we recommend that you seek independent advice from your accountant.